In previous issues of Progreso we have discussed the new European Directive amending Directive 2007/36/EC, 11 July 2007, on the exercise of certain rights held by shareholders in listed companies. The reform was designed to correct the shortcomings noted in large enterprises' corporate governance system and in particular those putting obstacles in the way of shareholders exercising their rights.

The Directive contained new requirements on identification of shareholders, disclosure of information and the exercise of their rights, focusing attention on the intermediaries* and their duty to cooperate in this identification process. This is the background to the publication of these Implementing Regulations, which endeavor to avoid the uneven application of the European Directive's stipulations and, as a result of the former, the creation of incompatible national standards, increased risks and costs of cross-border transactions and additional charges for intermediaries.

The Appendix to the Regulation specifies the minimum requirements that must be met in these areas, but also suggests that intermediaries and other market participants add to this information according to their needs.

Standard formats, interoperability and type of language

To make it easier for shareholders, to exercise their rights, the Regulation encourages the use of technology in communicating with them and between issuers** and intermediaries; for example, the use of standard, machine-readable formats that are interoperable between operators and enable automated processing from start to finish.

Furthermore, the issuer will have to publish the information in the language in which they publish their financial reports and use commonly accepted international finance terminology throughout.

Information disclosure

On the matter of the request to disclose information about shareholders and the response that should be given, the Regulation stipulates that the minimum requirements should ensure a consistent, automated and speedy application of the issuer's right to know who their shareholders are.

General Meeting of Shareholders

Table 3 of the Appendix lays out the minimum information contents that must be given to shareholders when convening general meetings: content of the message, information about the issuer, information about the meeting, the agenda, ways of participating and deadlines, etc.

The Regulation obliges the final intermediary to confirm shareholders’ rights, on request, either to the shareholder or third party nominated by them, by providing them the authorized positions that appear in their records entitling them to exercise their rights at the general meeting. Table 4 of the Appendix lists the minimum requirements on the type of information and data that must be included in the voting document.

To enable shareholders to exercise their rights themselves or else appoint a third-party proxy to do this, it will again be the intermediaries that must send the issuer the notification of their holding, if the issuer so demands, once the shareholder has asked for it. Minimum requirements on the type of information and data points that should be covered in this notification are set out in Table 5 of the Appendix.

Tables 6 and 7 of the Appendix set out the minimum information that must appear in the confirmation of the votes cast online and the confirmation of the registration and voting recount by the issuer to the shareholder or their proxy.

Company documents and other matters

The Regulation also provides for the information that the issuer must provide to intermediaries about company documents other than the general meetings, indicating the sequence of information exchange, dates and time frames that issuers and intermediaries should abide by on these matters and in the procedures to identify shareholders.

Security measures

When issuers and intermediaries are transferring information to shareholders or their proxies, they must apply appropriate measures, both technology-based and organizational, to guarantee the security, confidentiality and authenticity of the information provided.

Furthermore, the intermediary receiving a request from the issuer or their proxy to disclose shareholders' identities, or any other communication covered in the Regulation, must verify that the application or the information received really comes from the issuer.

Application

The Regulation will be obligatory and directly applicable in every member state from 3 September 2020.