What is the impact of the new shareholder rights legislation being implemented in August, and what are the key changes that will come into force?
On August 3 the EU Shareholder Rights Directive comes into force, aiming to improve corporate governance. It affects all UK companies listed on a regulated market, except AIM.
Essentially, it will allow shareholders to exercise their voting rights and rights to information more easily - and one objective is that shareholder activism should be both facilitated and encouraged.
Helen Johnson, partner at law firm CMS Cameron McKenna, says the regulations will require businesses to make only “quite simple changes”. However, she adds: “Generally, companies will be more answerable to shareholders, and this regulation is encouraging these businesses to give shareholders more information.”
One change is that as from August 3, the minimum shareholding threshold required for shareholders to be able to call a meeting will reduce from 10 per cent to 5 per cent. Businesses will also be required by law to put information on their websites regarding, for instance, information arising from meetings or any statements put forward by shareholders. It must remain online for at least two years.
In addition, shareholders will have a legal right to ask questions and have them answered at meetings - subject to certain caveats. However, companies do not need to answer if the questions have been answered in a Q&A session on the company’s website. It might therefore be useful for retailers to develop online Q&A sections to allow time to prepare a considered response.
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