The Luxembourg Bill Implementing Srd II as Regards the Encouragement of Long-Term Shareholder Engagement

On 25 January 2019, Bill No 7402 (the "Bill") implementing Directive (EU) 2017/828 as regards the encouragement of long-term shareholder engagement (the Shareholder Rights Directive II or SRD II) was introduced. The Bill amends the Act of 24 May 2011 on the exercise of shareholder rights and is intended to enhance the long-term sustainability of Luxembourg-based companies whose shares are listed on a regulated market in an EU Member State or, in the event of an opt-in, on a third-country regulated market.

The Bill introduces the following measures.

Right of companies to identify their shareholders

Intermediaries are required to provide the company, at the latter's request, with information regarding the identity of its shareholders. Certain provisions designed to ensure the protection of personal data are being considered in this regard.

Obligation of companies and intermediaries to facilitate the exercise of shareholder rights

Companies shall provide intermediaries with information relating to the exercise of shareholder rights in a timely and standardised manner. Intermediaries shall provide shareholders with information enabling them to exercise their rights, unless the company sends the information directly to its shareholders.

Intermediaries shall provide the company in a timely manner with all information received regarding the proposed exercise by shareholders of their rights.  

Intermediaries shall facilitate the exercise of shareholder rights, in particular the right to attend and vote at general meetings, by taking appropriate measures to enable shareholders or their representatives to exercise the rights directly or through the intermediary.

Remuneration policy and report

Companies shall prepare a management remuneration policy describing all components, criteria, methods and modalities applied to determine the fixed and variable remuneration of directors. The remuneration policy must contribute to the commercial strategy, interests and long-term sustainability of the company and indicate how it does so.

Shareholders have an advisory vote on the remuneration policy, unless the company's articles of association provide otherwise. The remuneration policy must be submitted to the general meeting of shareholders for approval every time there is a significant change thereto and at least every four years.

In addition, companies must prepare a report on the remuneration and benefits granted to directors for presentation to the annual general meeting.

Both the remuneration policy and report shall be made available on the company's website.

Transparency and approval of related-party transactions

Companies shall publicly disclose material transactions (excluding "transactions taking place as part of the company's ordinary activity and concluded under normal market conditions") with related parties no later than conclusion of the transaction. The notice shall include all information necessary to assess whether the transaction is fair and reasonable from the perspective of the company and shareholders who are not related parties, including minority shareholders.

Obligations of institutional investors and asset managers regarding the engagement policy and investment strategy

Institutional investors and asset managers shall prepare and publicly disclose an engagement policy that describes how they integrate shareholder engagement into their investment strategy. They shall also publicly disclose, each year, information on implementation of their engagement policy.

Institutional investors shall publicly disclose how the main elements of their equity investment strategy are consistent with the profile and duration of their liabilities, in particular long-term liabilities, and how they contribute to the medium to long-term performance of their assets.

Where an asset manager invests on behalf of an institutional investor, the institutional investor shall also publicly disclose certain information regarding its arrangement with the asset manager.

Greater transparency by asset managers

Certain annual disclosure obligations are imposed on institutional investor asset managers regarding how their investment strategy and the implementation thereof comply with the arrangement with the institutional investor and contribute to the medium to long-term performance of the institutional investor's assets or the fund.

Greater transparency by proxy advisors

Proxy advisors shall publicly disclose a reference to the code of conduct they apply and report on application of the code. They shall also publicly disclose on an annual basis certain information relating to the preparation of their research, advice and voting recommendations.

Proxy advisors shall identify and disclose without delay to their clients any actual or potential conflicts of interest or business relationships that could influence the preparation of their research, advice or voting recommendations and the actions they have taken to mitigate such conflicts.


Directors are personally and jointly liable for any damage resulting from breach of any of their obligations under the Bill.