Requirements for the protection of shareholders

General information and focus

1. General

The new Art. 367 et seq. PGR serve the implementation of DIRECTIVE (EU) 2017/828 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement.

The addressees of the Directive are, on the one hand, public companies listed in the EEA and, on the other hand, intermediaries and proxy advisors providing certain services with respect to shares of listed companies, as well as institutional investors and asset managers investing in shares traded on a regulated market.

According to its title, the directive aims to encourage long-term shareholder engagement. This goal is to be achieved in particular by increasing transparency and the influence of shareholders on processes within the company. The directive covers four major topics:

• The identification of shareholders ("know your shareholder");
• the transparency of institutional investors, asset managers and proxy advisors;
• the voting requirement on the remuneration policy and the remuneration report ("say on pay")as well as
• the transparency of related party transactions ("Related party transactions")

The implementation of the directive was carried out by means of partial revision of the company law in the “Law on Persons and Companies” and an adjustment in the Banking Act. In addition, an adjustment was made to the Ordinance on the Law on Persons and Companies.

2. Focal points of the new provisions

The new provisions essentially contain measures in the following four subject areas:

• Right of the company to identify its shareholders and to enable direct communication between the company and its shareholders;
• Increased transparency obligations for institutional investors, asset managers and proxy advisors to enable informed investment decisions;
• Right of shareholders to vote in the general meeting on the remuneration of members of management;
• Transparency of and approval of related party transactions by the general meeting of shareholders;

To ensure that the new regulations or measures are actually applied, violations of these regulations are to be punished with sanctions.