The EU’s revised Shareholders’ Rights Directive came into effect in June 2019, and it’s changing the way businesses communicate. From digitalising processes to improving transparency, there are many different ways it could affect your business, but Lumi is here to help. The resources on this page will help you contextualize SRD II and decide the next steps to bring your meetings and communications up to standard and into the future.
The world of 2020 is a complex place – in all aspects of life, the pace of change has never been as fast as it is now, but at the same time, will never be this slow again.
This applies to the world of corporate governance and communication as much as anything else. The traditional world of Annual General Meetings, resolutions, board elections and institutional shareholders is having to operate in a new environment. This includes cross-border complexity, increasing amounts of regulation, growing pressure to take into account environmental, social and governance issues and the need to demonstrate that you are a good corporate citizen. The answer to the question of how to run an annual general meeting has never been so cryptic.
This makes for a landscape that can often be confusing and surprisingly opaque. There are some markets where many companies do not even know who their shareholders are, and those shareholders cannot always be confident that their votes on company resolutions have been counted.
Meanwhile, there is more pressure on shareholders to prove they are responsible investors. This combination makes it more important than ever that companies and their investors can communicate with each other through the medium of AGMs and elsewhere – so that companies can explain what they are doing, with shareholders able to communicate to companies what they want and exercise their right to vote to make it happen.
But there are a number of trends that may help to make things easier. One is the move towards increased transparency and integration of all business processes. The other is the development of a new digital infrastructure that has transformed the economy and redefined how to run an AGM over the last decade.
In the world of annual meetings, thanks to features such as remote access, live polling and automatic registration, this digital transformation means that firms can run meetings more efficiently and accountably, engaging many more investors and allowing them to better exercise their rights as shareholders, even when they are unable to attend.
More and more information is being converted from physical artefacts to digital form. Everything from shareholder communications and meeting notices in newspapers, to proxy voting forms and ballot cards can be digitized, making them easier to disseminate and keep record of.
You can do all of this in one “Great Leap Forward” if you want to bring your shareholder communications and meetings up to date, but you don’t have to. Digitization can be a modular process, with different aspects being updated as appropriate. Furthermore, if necessary, these digital upgrades can co-exist alongside the traditional physical aspects of AGMs for as long as required without diluting their impact – the online and in-room experience can be integrated, improving meeting accuracy and efficiency.
Lumi’s technology has a key role to play in this streamlining and improvement of meetings and AGM voting procedures, but the digital revolution goes beyond the meeting itself – and a new European Union rule illustrates how embracing digitization can help you to future-proof your business.
The EU’s revised Shareholders’ Rights Directive (SRD II) came into force in June 2019. It aims to improve communications between companies and their shareholders, give investors a greater say on executive pay and encourage them to focus on the long-term sustainability of the company, rather than short-term profits. The new directive also makes it easier for companies to identify their shareholders and for shareholders to exercise their rights.
What this means in practice is that companies need to have the technology and platform in place to enable them to identify all their shareholders, communicate with them and verify the actions they take.
Lumi’s AGM solutions can support companies looking to comply with SRD II in a number of ways. These include secure, authenticated electronic voting registration, both remote and in-room. Ultimately this makes it easier for shareholders to vote and analyze post-meeting reports that show who voted for what.
Our platform has been extended to further help public companies streamline and make their meeting information SRD II-compliant. An API connection between the Lumi platform and institutional investors allow them to place their votes directly into the platform, capturing all the data in a single place, enabling companies to report to shareholders directly after the AGM.
SRD II is a perfect example of the kind of issue companies need to be prepared for in the investor relations space. The next challenge may be something completely different, but companies will be much better prepared for it if they are digitally enabled.