EU Shareholder Rights Directive

EuropeanCommission

5 October, 2017 -The Shareholder Rights Directive (2007/36/EC) (‘Directive’) was recently amended by Directive 2017/828 in a bid to enhance transparency and engage shareholders. It will affect EU companies listed on the EU regulated markets once it is transposed and comes into effect. Member States have been given two years to transpose the Directive into national law with the deadline being set for 10th June 2019.

One of the major changes brought about by this Directive is the change introduced to the process of providing remuneration for directors’ services. The shareholders must establish a remuneration policy for their directors and will thus have a direct influence over a director’s remuneration which will encourage a stronger link between pay and performance. 

The Directive also facilitates the identification of shareholders in order to expedite the exercise of shareholder rights within the company. Intermediaries are obliged under the Directive to pass on any company information that will enable the shareholders to exercise their rights in a timely manner.

Transactions with related parties are also regulated by the Directive wherein it provides that material related to party transactions are to be approved by the shareholders or a supervisory body in order to protect the interests of the company. Companies will be obliged to announce material transactions publicly at the conclusion of the transactions in order to allow an assessment as to the fairness of the transaction to be made.

The Directive also brought about new requirements which will affect institutional investors’ and asset managers’ transparency in relation to their approach to shareholder engagement. Many institutional investors and asset managers use proxy advisors in order to provide them with advice on how to vote in general meetings of listed companies and in view of this a code of conduct and rules relating to transparency for proxy advisors are to be developed.

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Employers’ right to monitor employees’ communication

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2 October, 2017 - The judgment of Barbulescu v. Romania which was recently delivered by the Grand Chamber of the European Court of Human Rights (‘ECtHR’), has shed light onto an employer’s right to monitor employees’ activities in the workplace.

The facts of the case related to a man who had been dismissed from his job for using a work messaging account to communicate with his family during work hours. The employee had been asked by his employer to create a messaging account to respond to clients’ enquiries and was not made aware that his employer was monitoring the messages sent from this account. 

The ECtHR concluded that there must be a balance between the right to privacy of an employee and the legitimate interests of the employer. In this case, the employer had accessed the messages contained in the messaging account believing it would contain messages relating to the employee’s professional capacity and his professional relationships with clients. The

ECtHR went on to limit the employer’s right to access employees’ private communication by distinguishing this particular case from other situations where employees might have a reasonable expectation of privacy. This reasonable expectation might arise where an employer doesn’t provide warning that there will be monitoring of an employee’s means of communication at the workplace.

Thus insofar as the employer’s interference is limited and proportionate it will not be considered a breach. However it is in the interests of employers to advise their employees on the company’s internal policies with regards to the usage of work related communication devices for personal purposes.

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