Below are key takeaways from ISS’ recently released 2020 Continental Europe (excluding France) Proxy Season Review. The full report is available to institutional subscribers by logging into ISS Link then selecting the Governance Exchange and its Report Center tab and to corporate subscribers by logging into Governance Analytics then selecting the Governance Exchange and the Report Center tab.
- COVID-19 Impacts: The unprecedented impact of the COVID-19 pandemic is undoubtedly the biggest focus of the European 2020 proxy season as it has presented significant challenges for public companies and shareholders. Governments took a number of measures in order to help facilitate the holding of annual general meetings (AGMs) without a physical presence being needed. Due to the economic uncertainties caused by the pandemic, many companies opted to withdraw initial dividend and buyback proposals and amend board and management remuneration proposals.
- Implementation of the EU Shareholder Rights Directive (SRD II): A major theme during 2020 proxy season was the transposition of the SRD II and the resulting increase of say-on-pay votes in several markets. In addition, SRD II was supplemented in 2018 by an Implementing Regulation laying out minimum requirements for implementation of certain provision of the directive (on the identification of shareholders, transmission of information, facilitation of the exercise of shareholder rights with an implementation). These minimum requirements were applicable in all member states from Sept. 3, 2020.
- Environmental disclosure takes focus: Climate change concerns remain at the center of environmental and social issues seen in Europe both amongst regulators and investors. The European Parliament adopted the Taxonomy regulation in June 2020, which establishes a classification system at EU level for sustainable activities in order to provide investors with clear and transparent information on environmental sustainability.
- Regulatory and corporate governance code changes: Additional regulatory changes are expected, along with corporate governance code updates. New codes have been introduced or are about to be introduced in Denmark, Italy, and Spain. Sustainability and non-financial disclosure are new elements introduced or expanded in these codes.
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