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The main impediments to the efficiency of the voting process have been already clearly identified and will be removed by the transposition of the Directive on the exercise of certain rights of shareholders in listed companies, published on the official journal on 11th July. For this reason, FESE is convinced that most of the subjects that are part of the current consultation should not be addressed at the EU level but rather left to Member States’ private law framework, contractual agreements between the parties involved and codes of best practice.
With this response, we provide the Commission with our viewpoints on the language of meetings documents, depositary receipts, stock lending, chain of intermediaries, and Management companies of investment schemes.
Language of meeting documents: FESE is strongly against any legislative initiative on the language in which General Meeting (GM) related documents are submitted. We are convinced that listed companies should be granted the maximum flexibility when deciding whether to publish GM related document in a different language. The decision concerning a specific language regime should be either left to self regulation by issuers or to the assessment of the market forces. In any case, should a recommendation be endorsed, we would welcome the proposal to leave the decision concerning the language of meeting documents to the GM; this would fully address the problem.Depositary Receipts: FESE supports the idea that there should be some sort of informed consent by holders of Depositary Receipts (DRs) as to how the depositary votes the underlying shares; however, we have concerns over the enforceability of such a proposal. For example, the DRs might be issued outside the EEA, even if the underlying company is within the EEA. In addition, the voting rights of the DR are set out in the terms and conditions (i.e. the buyer of the DR knows at the time of purchase whether or not this includes voting rights).
Stock Lending: We are against any EU regulation of stock lending. This practice is to be considered as part of the contractual agreement between two parties and therefore falls under the sphere of private law. The treatment of this practice should be left to market forces (e.g. industry, RMs and their competent authorities), the introduction of regulatory measures could interfere with its extremely useful applications such as improving and maintaining market liquidity, allowing market operators and asset managers to run short positions and reducing the risk of failed trades.
Chain of Intermediaries: The deficient functioning of the chain of intermediaries is one of the major obstacles to efficient cross-border voting. In order to take informed decisions, the end investor should always receive the relevant information in a timely manner.
FESE Response to the Commission's Consultation Paper on Shareholders' Rights.pdf
