Commission welcomes agreement on rules improving corporate governance in EU companies

An agreement was reached yesterday in trilogue, bringing together representatives of the European Parliament, the Council and the Commission, on the Commission’s proposal to revise the Shareholder Rights Directive which improves shareholders’ engagement in companies. The new rules will encourage more long-term engagement of shareholders and improve corporate governance of EU companies listed on a stock exchange.  Commissioner Jourová welcomed the agreement saying: “Sound corporate governance of companies and more transparency on remuneration is crucial in making the European economy more stable and European companies more sustainable.” Shareholders will be able to hold management accountable for their decisions and ensure that they take into account the business’ long-term interests. Key elements of the proposal include stronger transparency requirements for institutional investors and asset managers on their investment policies. For the first time, a European “say on pay” would be introduced to ensure a stronger link between management pay and performance. The proposal is in line with one of the new priorities under the Capital Markets Union, namely encouraging more sustainable investment. The agreement paves the way for formal adoption by the European Parliament and the Council. Following formal adoption, Member States will have 24 months for transposition.