Draft Law to transpose EU Directive on long-term shareholder engagement into Luxembourg national Law

On January 11th 2019, the Council of the Government (Le Conseil de gouvernement) discussed a draft law (the “Draft Law”) which has as its purpose the transposition into Luxembourg law of Directive (EU) 2017/828 of 17 May 2017 as regards the encouragement of long-term shareholder engagement (the “Shareholder Engagement Directive”).

The Shareholder Engagement Directive amended Directive 2007/36/EC on the exercise of certain rights of shareholders in listed companies (the “Shareholder Rights Directive”), which was transposed into Luxembourg law by the law of May 24th 2011 (the “Luxembourg Shareholder Rights Law”). The main objective of the Shareholder Engagement Directive is to improve the long-term viability of listed companies within the European Union and to create a more attractive environment for shareholders of those companies. We previously discussed (in our September 2014 Newsletter) the Shareholder Engagement Directive when a draft of it was first proposed by the European Commission. The final version of that directive provides, inter alia, for the following:

  • the establishment of a framework for listed companies within the European Union to identify their shareholders which shall facilitate direct communication between companies and their shareholders ;
  • the obligation for intermediaries to promptly transmit shareholder information, thus facilitating the exercise of shareholders’ rights;
  • mandatory transparency of voting such that any shareholder who casts a vote in a general meeting should have the possibility to verify if that vote has been validly recorded and counted;
  • mandatory transparency on costs charged by intermediaries and other aspects of their engagement;
  • the obligation for proxy advisors to provide information on their methods and to disclose any conflicts of interest;
  • the requirement on companies to establish a remuneration policy and submit it to a vote by the general meeting;
  • the requirement for a company to draw up a remuneration report on the preceding year and to submit it to the general meeting for an advisory vote;
  • increased transparency and independent advice on related parties transactions, as well as the submission of material related party transaction to the shareholders for approval.

The Draft Law is not yet publicly available but given that the Shareholder Engagement Directive should be transposed into national law by June 10th 2019, we expect the Draft Law to be published in the near future.