The Shareholders Rights Directive (SRD II): what you should know and what you can do  

Written on 10 May 2021

On 28 April 2020, the Belgian Parliament proclaimed an act transposing Directive (EU) 2017/828 - also known as the second Shareholders Rights Directive ("SRD II") - as regards the encouragement of long-term shareholder engagement (the "Law of 28 April 2020").* If not done so already, listed companies should be proactive and prepare the necessary remuneration related documents in preparation for their upcoming general shareholders' meetings. Updated May 2021

SRD II and the Law of 28 April 2020 are mainly relevant for listed companies, institutional investors and intermediaries. SRD II aims to encourage long-term shareholder engagement in order to ensure that decisions are made in the best interest of the long-term stability of a company. SRD II contributes to:

  1. improving the oversight of directors’ remuneration;
  2. refining regulation on related party transactions;
  3. facilitating shareholder identification and the flow of information between the shareholders and the company and
  4.  increasing the transparency of institutional investors, proxy advisors and asset managers

We have prepared practical guidance focussing on the elements of the SRD II that have an immediate impact on Belgian listed companies. Other measures initiated by the SRD II not discussed here apply to institutional investors and intermediaries.
When relevant, we have also taken into account the impact of the entry into force of the EU Sustainable Finance Disclosure Regulation and of the renewed Corporate Governance Code 2020 for listed companies.
Our Corporate experts have updated their analysis as of May 2021 to guide you through some of the most salient aspects of this directive and the Law of 28 April 2020. You can click on the titles below to access each insight.

Remuneration report: increased scrutiny required

Although listed companies were already required to draft a remuneration report, the Law of 28 April 2020 further enlarged this requirement, by increasing and the level of detail in which such information must be reported. A thorough analysis of the remuneration types and relevant persons falling under these new reporting obligations is a logical starting point. The new rules on the content of the remuneration report need to be applied for the first time to the report to be published in 2021. Listed companies must also take into account the interplay of this regulation with the renewed 2020 Belgian Code on Corporate Governance for listed companies, which applies to Belgian listed companies as of the financial year starting on or after 1 January 2020.

Remuneration policy: shareholders have say-on-pay

The remuneration policy became a formal instrument which must be approved by the shareholders' meeting for the first time when deciding upon the approval of the annual accounts to be published in 2021. The first formal remuneration policy in the meaning of the Law of 28 April 2020 will have a major impact on the future remuneration practices of listed companies. This is in no small part because of the limited leeway for derogations and the far-reaching consequences of not obtaining shareholders' approval on a new or materially revised remuneration policy. Also with regard to the remuneration policy, listed companies should take into account the interplay with the EU Sustainable Finance Disclosure Regulation and the renewed 2020 Belgian Code on Corporate Governance for listed companies. Hence, proper understanding and thorough preparation thereof will be key.