UK Regulator Consults on Proposed Changes to Handbook to Implement EU Shareholder Rights Directive II

The Financial Conduct Authority has launched a consultation on proposed revisions to the Handbook to implement changes made to the EU Revised Shareholder Rights Directive. The Directive aims to promote shareholder engagement, effective stewardship and long-term investment decision-making through enhancing the transparency of engagement policies and investment strategies across the institutional investment community.

The current U.K. rules for premium-listed companies already set out relevant requirements that are more stringent than those suggested by the Directive. The FCA therefore suggests leaving the premium listing regime intact. Broadly, the FCA has taken an approach which imposes minimum change on issuers and would make any changes for non-premium companies proportionate.

The FCA is proposing to introduce rules that require U.K. companies with shares admitted on a regulated market to disclose and seek board approval for related party transactions. The proposed materiality threshold is 25% of one of profits, assets, market cap and gross capital, and the definition of related party from the Directive is also wider than the definition in the premium listing regime.

The FCA is also proposing to make changes specific to asset managers:

• Asset managers and certain life insurers would be required to make disclosures relating to their shareholder engagement policies; and
• Asset managers would be required to make disclosures relating to their arrangements with asset owners and how their investment strategies are consistent with the medium- and long-term performance of the assets of the asset owner or fund.

The consultation closes on March 27, 2019.

View the consultation paper.

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