SRD II - New Shareholder Engagement & Transparency Obligations

On 10 July 2019, the Luxembourg parliament adopted the final text of the bill of law implementing into Luxembourg domestic law the provisions of Directive (EU) 2017/828 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement (the “SRD II”) and amending the Luxembourg law of 24 May 2011 on the exercise of certain rights of shareholders in listed companies (the "SRL"). Although the SRL originally only provided for requirements for issuers relating to the exercise by shareholders of their rights in connection with general meetings, SRD II introduced new “share-holder engagement” and transparency obligations for institutional investors and asset managers that invest in listed companies. This contribution analyses the impact of the obligations arising from the amended Luxembourg SRL on asset managers and institutional investors investing in listed companies. To that end, this contribution first discusses the scope of the SRL legal framework and the "shareholder engagement" and transparency obligations that are applicable to asset managers and institutional investors. This contribution continues by explaining why the new “shareholder engagement” and transparency obligations are not appropriate for fund managers in the context of the SRL. It then concludes.