European Market Standards on General Meetings
The Joint Working Group on General Meetings (JWGGM) proposed on 2 December harmonised communication standards for general shareholder meetings. The standards aim at increasing the levels of non-domestic shareholder participation in general meetings across Europe.
While foreign ownership of shares continues to grow, exercising the corporate rights that come with the shares, in particular the right to vote at the shareholders meeting, is too often hampered by technical, practical and legal obstacles. These obstacles are: 1) the lack of efficient access for (foreign) shareholders to GM related information and documentation, 2) the lack of direct communication possibilities for the issuer and the shareholder and 3) the absence of an efficient cross-border voting framework. Many of the barriers stem from the shares being held via book entry through a chain of intermediaries.
The standards now aim at enabling access to information by involving the chain of intermediaries to ensure the passing up and down of information. The standards cover 3 areas: 1) the issuer's notice to convene the meeting, 2) the entitlement to vote and 3) the shareholder's notification of attendance including his votes. The standards are set against the background of the Shareholder Rights Directive of 11 July 2007. Some key features of the standards: 1) end-to-end communication including the end shareholder, 2) communication by default with the possibility of opting out for the end shareholder only, 3) a unique proof of entitlement and 4) services of a basic (non paper based) level to be charged at cost throughout the chain.
The JWGGM is a European Commission-sponsored working group including representatives of issuers (EuropeanIssuers), CSDs (ECSDA), securities account providers (ESSF, EBF, EACB, ESBG) and stock exchanges (FESE).
The market can comment on the consultation document at info@europeanissuers.eu until 15 February 2009.
See the Consultation document and the press release.
Market Standards on Corporate Actions
The consultation on the draft Market Standards on Corporate Actions Processing, proposed by the CAJWG (Corporate Actions Joint Working Group), is still running until 19 December. The proposed standards cover Distributions and Reorganisations as well as related Transaction Management (Market Claims, Transformations and Buyer Protection). The standards apply to issuers, clearing and settlement infrastructures, intermediaries and benefit investors. The standards prescribe timelines, info flow, message format, processing procedures, etc. EuropeanIssuers is preparing a comment letter.
See the Consultation document.
Credit Rating Agencies
The Commission adopted on 12 November a proposal for a Regulation on credit rating agencies (CRAs). The proposed rules are based on the standards of the International Organisation of Securities Committees (IOSCO) but the Commission proposes stricter rules in some areas. The proposed Regulation introduces among others a registration procedure and an effective surveillance regime whereby CESR and national authorities would supervise CRAs. Other provisions focus on conflicts of interests, disclosure of information, transparency, internal control and composition and remuneration of the board of directors. EuropeanIssuers will prepare a position paper by mid January.
See the press release and the proposal.
CESR Consultation Market Abuse Level 3 - second part
EuropeanIssuers will prepare comments on the October consultation of CESR, the Committee of European Securities Regulators, regarding its third set of guidance and information on the common operation of the Market Abuse Directive. The objective is the convergent implementation and application of the Market Abuse regime by common approach amongst supervisors throughout the EU. This consultation focuses on stabilization and the two-fold notion of inside information and follows the consultation on insider lists and suspicious transaction reporting. The consultation is open for comments until 9 January 2009. EuropeanIssuers is working on a position paper.
See the Consultation document.
MiFID - Impact on secondary markets functioning
CESR has also released a call for evidence on the impact of MiFID on secondary markets functioning. CESR’s evaluation will also serve as a preparation for the upcoming Commission evaluation of MiFID planned for 2010.
In a first stage the analysis will focus on equity secondary markets. Besides MiFID provisions, the evaluation will also include some related provisions of the MiFID Implementing Regulation, such as market transparency and integrity, regulated markets and multilateral trading facilities. Issues surrounding transaction reporting under article 25 MiFID are dealt with separately. The deadline for this consultation is 9 January 2009. EuropeanIssuers is looking at the consultation and prepares its comments and suggestions for improvement of the MiFID regime.
See the Consultation document.
Simplification of Company law - Commission’s proposal on mergers and divisions
The Legal Committee of EuropeanIssuers is examining also the Commission’s proposal for a Directive that will further reduce the administrative burden on European public limited-liability companies in the area of mergers and divisions. The proposal complements the two packages of “fast track” measures that were put forward by the Commission in March 2007 and April 2008. To see the proposal, click here.
Many of the regulatory developments announced in our October newsletter have since materialised. Several measures have been taken by the EU regulator to tackle the financial crisis including a proposal for a regulation on credit rating agencies - often seen as one of the major scapegoats. A special taskforce is looking at the possibility to set up a central clearing party for OTC derivatives. Other initiatives were taken in the area of accounting and financial reporting as you will read further in this newsletter.
Some shocking events that occurred with regard to listed stock prompted us to write a letter to Commissioner McCreevy to plead once more for a better disclosure regime for shareholders. We also drew the Commission’s attention to possible flaws in the transparency and other capital markets regulation.
As regards corporate governance and shareholder rights, we are very pleased with the release on 25 November of the market standards on general meetings. A related matter of equal importance to issuers is the Second Advice of the Legal Certainty Group. EuropeanIssuers has made a detailed analysis and expressed its views in an extensive comment paper. The third face to face meeting of our Legal Committee, kindly hosted by VEUO in Amsterdam on 3 December, was also dedicated to the topic of general shareholder meetings and cross-border voting.
The above is just a small selection of the issues and activities that kept us busy over the last two months as you are about to learn.
We wish you a pleasant and interesting reading!
Merry Christmas and Happy New Year,
Kind regards,
Dorien Fransens
Secretary General
Latest News Latest Positions Works in progress Calendar Presentations & speeches
Latest News
9/12/08 EFRAG publishes feed-back on its enhancement proposals and presents its final report
EFRAG released the feed-back on its public consultation document “Strengthening the European Contribution to the International Standard-Setting Process” as well as its final report on the enhancement of its structure. The final report presents the new structure of EFRAG and the funding estimates for 2009 and 2010.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=87
top8/12/08 CESAME’s report takes stock of 4 years work to dismantle Giovanninni barriers
The European Commission’s Clearing and Settlement Advisory and Monitoring Expert Group (“CESAME”) has issued a comprehensive report on its four years of work on removing industry-related barriers (6 of the so-called Giovanninni barriers) to cross-border clearing and settlement securities transactions.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=86
18/11/08 EC consultation looks at ways to facilitate market entry for new audit firms
Following an independent study on the ownership rules of audit firms, the European Commission launches a consultation on control structures in audit firms.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=82
3/11/08 EC adopts Regulation consolidating all IFRS in the EU
The European Commission has adopted on 3 November the consolidated text of all International Financial Reporting Standards (IFRS) in force in the EU, putting together all IFRS endorsed to date.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=76
31/10/08 EC draws up scoreboard on transposition of Audit Directive
On 31 October, The European Commission drew up a first overview of the implementation of the Statutory Audit Directive (2006/43/EC) in all 27 Member States.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=79
17/10/08 OTC derivatives under EC scrutiny
In a speech dated 17 October, Commissioner McCreevy, Internal Market and Services, stressed the need for a strong central clearing counterparty for over the counter derivatives.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=72
15/10/08 New EC Regulation to loosen Accounting Standards
On 15 October, the European Commission adopted amendments to accounting standards so as to mitigate the consequences of the recent turbulence in financial markets, ensuring that European financial institutions enjoy the same flexibility as their American competitors.
http://www.europeanissuers.eu/en/?inc=page&pageid=news,newsflash&id=71
Latest Positions
Disclosure Regime of Transparency Directive
EuropeanIssuers plead with Commr McCreevy to address the difficulties issuers have to know their shareholders. Particularly in a cross border environment where shareholdings are intermediated and the determination of a person as shareholder depends on a maze of complex - sometimes impossible to detangle - financial transactions. A EU study should be carried out on a possible enlargement of the scope of the mandatory disclosure regime so as to expose hidden ownership of securities. The issuer-shareholder relationship is to be preserved and shareholders must be able to enjoy their rights and assume their responsibilities vis-à-vis the company of which they are co-owner. These corporate rights and obligations should not be sacrificed to the interest of capital markets.
http://www.europeanissuers.eu/en/?inc=page&pageid=positions&id=167
Legal Certainty Group 2nd Advice
EuropeanIssuers expresses support for the Second Advice but is concerned that some recommendations (rec. 3, 4, 10, 13 and 14) are contradictory or unsatisfactory. These flaws are caused by the systematic referral to contractual agreements, feasibility and the applicable law, resulting in an Advice that calls for legislation that could be easily put aside by waivers or opt-outs or resulting even in a legislator’s decision to do nothing. These flaws are to be addressed in the light of any future legislation. We regret there are no proposals to enable identification, at any moment, of the (end) shareholder. Finally, the Advice, although acknowledging the holding through a chain of intermediaries as causing barriers to communication and voting, doesn’t raise the question why the chains exist.
http://www.europeanissuers.eu/en/?inc=page&pageid=positions&id=166
Calendar
21/01/2009
CorpActions 2009 Europe - London
SOF (Securities Operations Forum) in association with SWIFT (Society for Worldwide Interbank Financial Telecommunication) organises a full day conference on the subject of "Corporate Actions". The event will take place in London from 8h30 to 17H40. Secretary General Dorien Fransens will be part of a panel on "Issuers Announcements".
To see the agenda click here.
22/01/2009
DAI New Year's reception 2009 - Brussels
Our member Deutsches Aktieninstitut, the German association of listed companies, will host its New Year's reception in Brussels in the Bibliothèque Solvay at 6 p.m. This year's speaker will be Germany's Federal Minister of Justice Brigitte Zypries.
27/01/2009
European Financial Services Conference - Brussels
Our member Assonime, the Italian Association of listed companies, co-organises the 7th Annual European Financial Services Conference that will be held in the ING Auditorium, Brussels, form 9h00 to 15h45. The conference will focus on the theme: "Financial Markets & Economy Recovery - Restoring Confidence and Responding to Public Concerns".
For program and other info please click here.
Presentations & speeches
Various meetings - 9 & 10/12/08 - Market Standards General Meetings - London
EuropeanIssuers' Secretary General Dorien Fransens promoted the market standards on general meetings with several corporations in London, including the Institute of Chartered Secretaries and Administrators, the Investment Management Association, the registrars Computershare and Equiniti and the corporate governance firm HQB.
For the presentation, click here.
DACSI meeting - 26/11/08 - Market Standards General Meetings - Utrecht
EuropeanIssuers' Secretary General Dorien Fransens gave a presentation to DACSI - Dutch Advisory Committee Securities Industries - on the activities of EuropeanIssuers in general and the market standards on general meetings in particular. See the sections Clearing and Settlement and Shareholders Rights in the Topical Library for more information.
For the presentation, click here.
BE MIG meeting - 18/11/2008 - Market Standards General Meetings - Brussels
Secretary General Dorien Fransens gave a presentation at FEBELFIN in Brussels to the Belgian Market Implementation Group (BE MIG) on the draft Market Standards on General Meetings. These market standards are being developed as part of the actions undertaken to remove the so called Giovannini Barrier 3 on Corporate Actions. See the sections Clearing and Settlement and Shareholders Rights in the Topical Library for more information.
For the presentation, click here.
CESAME II - meeting 20/10/08 Brussels - Corporate Actions Barrier 3
Secretary General Dorien Fransens gave a presentation on the state of progress made on the removal of Barrier 3 on Corporate Actions, focusing on the works of the Joint Working Group on the Market Standards on General Meetings.
For the presentation, click here.
