34 Amendments of Molly SCOTT CATO related to 2014/0121(COD)
Amendment 63 #
Proposal for a directive
Title
Title
Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement and, Directive 2013/34/EU and Directive 2004/109/EC as regards certain elements of the corporate governance statementreporting (Text with EEA relevance)
Amendment 64 #
Proposal for a directive
Recital 2
Recital 2
(2) The financial crisis has revealed that shareholders in many cases supported managers' excessive short-term risk taking. Moreover, there is clear evidence that the current level of ‘monitoring’ of investee companies and engagement by institutional investors and asset managers is inadequate, which may lead to suboptimal corporate governance and performance of listed companies. This specific proposal should have a broad focus to increase transparency and to respect and ensure active engagement from effected stakeholders, hence other actors such as employees, consumers and local communities are highly relevant in the overall context of stakeholder involvement.
Amendment 66 #
Proposal for a directive
Recital 3
Recital 3
(3) In the Action Plan on European company law and corporate governance16 the Commission announced a number of actions in the area of corporate governance, in particular to encourage long-term shareholder engagement and to enhance transparency between companies and investors. Additional steps could be envisaged, including further assessing the way asset managers' incentives are structured to take better account of long- term considerations and requiring more transparency from asset managers on the fulfilment of their fiduciary duties. Ideas have also been advanced to encourage greater long-term shareholder engagement, which could be subject to further consideration, such as analysing the possibility of options around granting increased voting rights or dividends to long-term investors. __________________ 16 COM/2012/0740 final.
Amendment 68 #
Proposal for a directive
Recital 4
Recital 4
(4) In order to further facilitate the exercise of shareholder rights and engagement between listed companies and shareholders, listed companies should have the possibility to have their shareholders identified and directly communicate with them. Therefore, this Directive should provide for a framework to ensure that shareholders can be identified to secure transparency and improve dialogue.
Amendment 72 #
Proposal for a directive
Recital 11 a (new)
Recital 11 a (new)
(11a) To extend the idea of shareholder engagement companies should consider the creation of representative shareholder bodies (shareholder panels) to monitor the activities of fund managers. Such panels would consist of members elected by individual investors or current or future recipients of pensions managed by the asset manager of the company.
Amendment 74 #
Proposal for a directive
Recital 12
Recital 12
(12) Institutional investors should annually disclose to the public how their equity investment strategy is aligned with the profile and duration of their liabilities and how it contributes to the medium to long- term performance of their assets. Where they make use of asset managers, either through discretionary mandates involving the management of assets on an individual basis or through pooled funds, they should disclose to the public the main elements of the arrangement with the asset manager with regard to a number of issues, such as whether it incentivises the asset manager to align its investment strategy and decisions with the profile and duration of the liabilities of the institutional investor, whether it incentivises the asset manager to make investment decisions based on medium to long-term company performance and to engage with companies, how it evaluates the asset managers performance, the structure of the consideration for the asset management services and the targeted portfolio turnover. This would contribute to a proper alignment of interests between the final beneficiaries of institutional investors, the asset managers and the investee companies and potentially to the development of longer-term investment strategies and longer-term relationships with investee companies involving shareholder engagement. hereby encouraging cooperative models of enterprise to align ownership and employment incentives by ensuring employees representation on boards as mandatory and to set up an stakeholder body to ensure dialogue between corporate management and shareholders on the investment strategy and how to secure the shareholder engagement plan.
Amendment 77 #
Proposal for a directive
Recital 13
Recital 13
(13) Asset managers should be required to disclose to institutional investorsthe public how their investment strategy and the implementation thereof is in accordance with the asset management arrangement and how the investment strategy and decisions contributes to medium to long- term performance of the assets of the institutional investor. Moreover, they should disclose whether they make investment decisions on the basis of judgements about medium-to long- term performance of the investee company, how their portfolio was composed and the portfolio turnover, actual or potential conflicts of interest and whether the asset manager uses proxy advisors for the purpose of their engagement activities. This information would allow the institutional investoraffected stakeholders to better monitor the asset manager, provide incentives for a proper alignment of interests and for shareholder engagement.
Amendment 78 #
Proposal for a directive
Recital 14
Recital 14
(14) In order to improve the information in the equity investment chain Member States should impose a fiduciary duty on non- executive directors, accountants and external auditors and ensure that proxy advisors adopt and implement adequate measures to guarantee that their voting recommendations are accurate and reliable, reliable and in the best interest of the affected stakeholders, based on a thorough analysis of all the information that is available to them and are not affected by any existing or potential conflict of interest or business relationship. They should disclose certain key information related to the preparation of their voting recommendations and avoid any actual or potential conflict of interest or business relationships that may influence the preparation of the voting recommendations.
Amendment 79 #
Proposal for a directive
Recital 15
Recital 15
(15) Since remuneration is one of the key instruments for companies to align their interests and those of their directors and in view of the crucial role of directors in companies, it is important that the remuneration policy of companies is determined in an appropriate manner. Without prejudice to the provisions on remuneration of Directive 2013/36/EU of the European Parliament and of the Council17 listed companies and their shareholders should have the possibility to define the remuneration policy of the directors of their company and disclose in public the pay ratio and gender pay ratio between directors and employees in the company. __________________ 17 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms OJ L 176, 27.6.2013, p. 338..
Amendment 84 #
Proposal for a directive
Recital 16
Recital 16
(16) In order to ensure that shareholders have an effective say on the remuneration policy, they should be granted the right to approve the remuneration policy, on the basis of a clear, understandable and comprehensive overview of the company's remuneration policy, which should be aligned with the business strategy, objectives, values and long-term interests of the company and should incorporate measures to avoid conflicts of interest. Companies should only pay remuneration to their directors in accordance with a remuneration policy that has been approved by shareholders. The approved remuneration policy and pay ratio should be publicly disclosed without delay.
Amendment 87 #
Proposal for a directive
Recital 17
Recital 17
(17) To ensure that the implementation of the remuneration policy is in line with the approved policy, shareholders should be granted the right to vote on the company’s remuneration report in the general meeting. In order to ensure accountability of directors the remuneration report should be clear and understandable and should provide a comprehensive overview of the remuneration granted to individual directors in the last financial year viewed in a clear table the pay ratio and gender pay ratio between directors and employees . Where the shareholders vote against the remuneration report, the company should explain in the nextneed to adjust the remuneration policy and report how the vote of the shareholders has been taken into account and incorporated into the company's remuneration policy in the next remuneration report to the next general assembly.
Amendment 88 #
Proposal for a directive
Recital 17 a (new)
Recital 17 a (new)
(17a) Increased transparency regarding the activities of large companies, and in particular regarding profits made, taxes on profit paid and subsidies received, is essential for ensuring the trust of shareholders and other EU citizens in companies. Mandatory reporting in this area can therefore be seen as an important element of the corporate responsibility of companies to shareholders and society.
Amendment 93 #
Proposal for a directive
Recital 19
Recital 19
(19) Transactions with related parties may cause prejudice to companies and their shareholders, as they may give the related party the opportunity to appropriate value belonging to the company. Thus, adequate safeguards for the protection of shareholders’ interests are of importance. For this reason Member States should ensure that related party transactions representing more than 5 %, depending on national conditions and practices, should decide whether the requirement to hold a shareholder vote is proportionate for all related party transactions of 5% or more or whether it should apply only to transactions which are not concluded on market terms of the companies’ assets or transactions which can have a significant impact on profits or turnover should be submitted to a vote by the shareholders in a general meeting. Where the related party transaction involves a shareholder, this shareholder should be excluded from that vote. The company should not be allowed to conclude the transaction before the shareholders’ approval of the transaction. For transactions with related parties that represent more than 10.25 % of their assets companies should publicly announce such transactions at the time of the conclusion of the transaction, and accompany the announcement by a report from an independent third party assessing whether the transaction is on market terms and confirming that the transaction is fair and reasonable from the perspective of the shareholders, including minority shareholders. Member States should be allowed to exclude transactions entered into between the company and its wholly owned subsidiaries. Member States should also be able to allow companies to request the advance approval by shareholders for certain clearly defined types of recurrent transactions above 5 percent of the assets, and to request from shareholders an advance exemption from the obligation to produce an independent third party report for recurrent transactions above 1 percent of the assets, under certain conditions, in order to facilitate the conclusion of such transactions by companies.
Amendment 97 #
Proposal for a directive
Recital 22
Recital 22
(22) In order to ensure that the requirements set out in this Directive or the measures implementing this Directive are applied in practice, any infringement of those requirements should be subject to penaltiea harsher penalty regime by including the introduction of individual sanctions, individual fines and directors disqualifications against the company's executive directors and proxy advisors. To that end, penalties should be sufficiently dissuasive and proportionate.
Amendment 102 #
Proposal for a directive
Article 1 – paragraph 1 – point 1 – point b
Article 1 – paragraph 1 – point 1 – point b
Directive 2007/36/EC
Article 1 – paragraph 4
Article 1 – paragraph 4
4. Chapter Ib shall apply to proxy advisors, institutional investors and to asset managers to the extent that they invest, directly or through a collective investment undertaking, on behalf of institutional investors, in so far they invest in shares.
Amendment 104 #
Proposal for a directive
Article 1 – paragraph 1 – point 2
Article 1 – paragraph 1 – point 2
Directive 2007/36/EC
Article 2 – point h
Article 2 – point h
(h) ”shareholder engagement’ means the monitoring by a shareholder alone or together with other shareholders in a shareholder panel, of companies on matters such as strategy, performance, risk, capital structure and corporate governance, having a dialogue with companies on these matters and voting at the general meeting.
Amendment 105 #
Proposal for a directive
Article 1 – paragraph 1 – point 2
Article 1 – paragraph 1 – point 2
Directive 2007/36/EC
Article 2 – point j a (new)
Article 2 – point j a (new)
(ja) "stakeholder" means a person, group or local community that has interest or concerns or is directly affected by the company's decisions or strategy.
Amendment 122 #
Proposal for a directive
Article 1 – paragraph 1 – point 3
Article 1 – paragraph 1 – point 3
Directive 2007/36/EC
Chapter IB – article 3f – paragraph 2 – point a
Chapter IB – article 3f – paragraph 2 – point a
(a) the proxy advisor, the institutional investor or the asset manager, or other companies affiliated to them, offer financial products to or have other commercial relationships with the investee company;
Amendment 123 #
Proposal for a directive
Article 1 – paragraph 1 – point 3
Article 1 – paragraph 1 – point 3
Directive 2007/36/EC
Chapter IB – article 3f – paragraph 2 – point b
Chapter IB – article 3f – paragraph 2 – point b
(b) a director of the proxy advisor, the institutional investor or the asset manager is also a director of the investee company;
Amendment 124 #
Proposal for a directive
Article 1 – paragraph 1 – point 3
Article 1 – paragraph 1 – point 3
Directive 2007/36/EC
Chapter IB – article 3f – paragraph 2 – point c
Chapter IB – article 3f – paragraph 2 – point c
(c) a proxy advisor, an asset manager managing the assets of an institution for occupational retirement provision invests in a company that contributes to that institution;
Amendment 125 #
Proposal for a directive
Article 1 – paragraph 1 – point 3
Article 1 – paragraph 1 – point 3
Directive 2007/36/EC
Chapter IB – article 3f – paragraph 2 – point d
Chapter IB – article 3f – paragraph 2 – point d
(d) the proxy advisor, the institutional investor or asset manager is affiliated with a company for whose shares a takeover bid has been launched.
Amendment 127 #
Proposal for a directive
Article 1 – paragraph 1 – point 3
Article 1 – paragraph 1 – point 3
Directive 2007/36/EC
Chapter IB – article 3f – paragraph 3
Chapter IB – article 3f – paragraph 3
3. Member States shall ensure that proxy advisors, institutional investors and asset managers publicly disclose on an annual basis their engagement policy, how it has been implemented and the results thereof. The information referred to in the first sentence shall at leastlso be available on the company's website. IProxy advisors, institutional investors and asset managers shall, for each company in which they hold shares, disclose if and how they cast their votes in the general meetings of the companies concerned and provide an explanation for their voting behaviour. Where an asset manager casts votes on behalf of a proxy advisor or an institutional investor, the proxy advisor and the institutional investor shall make a reference as to where such voting information has been published by the asset manager.
Amendment 142 #
Proposal for a directive
Article 1 – paragraph 1 – point 3
Article 1 – paragraph 1 – point 3
Directive 2007/36/EC
Chapter IB – article 3i – paragraph 1
Chapter IB – article 3i – paragraph 1
1. Member States shall ensure that proxy advisors adopt and implement adequate measures to guarantee that their voting recommendations are accurate and reliable, reliable and in the best interest of this client, based on a thorough analysis of all the information that is available to them.
Amendment 145 #
Proposal for a directive
Article 1 – paragraph 1 – point 3
Article 1 – paragraph 1 – point 3
Directive 2007/36/EC
Chapter IB – article 3i – paragraph 2 – point d
Chapter IB – article 3i – paragraph 2 – point d
(d) whether they have dialogues with the companies which are the object of their voting recommendations, and, if so, the extent and nature thereof, but in no conflict of interests;
Amendment 146 #
Proposal for a directive
Article 1 – paragraph 1 – point 3
Article 1 – paragraph 1 – point 3
Directive 2007/36/EC
Chapter IB – article 3i – paragraph 2 – point f
Chapter IB – article 3i – paragraph 2 – point f
(f) the total number of voting recommendations and identification of stakeholders provided in the last year.
Amendment 147 #
Proposal for a directive
Article 1 – paragraph 1 – point 3
Article 1 – paragraph 1 – point 3
Directive 2007/36/EC
Chapter IB – article 3i – paragraph 2 – subparagraph 2
Chapter IB – article 3i – paragraph 2 – subparagraph 2
That information shall be published on their website and remain available for at least threfive years from the day of publication.
Amendment 148 #
Proposal for a directive
Article 1 – paragraph 1 – point 3
Article 1 – paragraph 1 – point 3
Directive 2007/36/EC
Chapter IB – article 3i – paragraph 3
Chapter IB – article 3i – paragraph 3
3. Member States shall ensure that proxy advisors identify and disclosguarantee without undue delay to their clients and the company concerned anyno actual or potential conflict of interest or business relationships that may influence the preparation of the voting recommendations and the actions they have undertaken to eliminate or mitigate the actual or potential conflict of interest.“
Amendment 151 #
Proposal for a directive
Article 1 – paragraph 1 – point 4
Article 1 – paragraph 1 – point 4
Directive 2007/36/EC
Article 9a – paragraph 1 – subparagraph 1
Article 9a – paragraph 1 – subparagraph 1
1. Member States shall ensure that shareholders have the right to vote on the general meeting on the remuneration policy as regards directors and the pay ratio between directors and employees. Companies shall only pay remuneration to their directors in accordance with a remuneration policy that has been approved by shareholders at the general meeting. The policy shall be submitted for approval by the shareholders at any change in the ratio and at least every threesecond years.
Amendment 155 #
Proposal for a directive
Article 1 – paragraph 1 – point 4
Article 1 – paragraph 1 – point 4
Companies may, in case of recruitment of new board members, decide to pay remuneration to an individual director outside the approved policy, where the remuneration package of the individual director has received prior approval by shareholders on the basis of information on the matters referred to in paragraph 3. The remuneration may be awarded provisionally pending approval by the vote in the general meeting by shareholders.
Amendment 173 #
Proposal for a directive
Article 1 – paragraph 1 – point 4
Article 1 – paragraph 1 – point 4
Directive 2007/36/EC
Article 9b – paragraph 1 – point f
Article 9b – paragraph 1 – point f
(f) information on how the remuneration of directors was established in accordance to the published pay ratio between directors and employees and the gender pay ratio, including on the role of the remuneration committee.
Amendment 189 #
Proposal for a directive
Article 1 – paragraph 1 – point 4
Article 1 – paragraph 1 – point 4
Directive 2007/36/EC
Article 9c – paragraph 2 – subparagraph 1
Article 9c – paragraph 2 – subparagraph 1
2. Member States shall ensure that transactions with related parties representing more than 5% of the companies’ assets or transactions which can have a significant impact on profits or turnover are submitted to a vote by the shareholders in a general meeting, depending on national conditions and practices, decide whether the requirement to hold a shareholder vote is proportionate for all transactions with related parties representing more than 5% of the companies’ assets or whether it should apply only to transactions which are not concluded on market terms. Where the related party transaction involves a shareholder, this shareholder shall be excluded from that vote. The company shall not conclude the transaction before the shareholders’ approval of the transaction. The company may however conclude the transaction under the condition of shareholder approval.
Amendment 196 #
Proposal for a directive
Article 1 – paragraph 1 – point 5
Article 1 – paragraph 1 – point 5
Directive 2007/36/EC
Chapter IIA – article 14b – paragraph 1
Chapter IIA – article 14b – paragraph 1
Member States shall lay down the rules on penalties applicable to infringements of the fiduciary duty of non-executive directors, accountants, external auditors and any proxy advisors in addition to infringements of national provisions adopted pursuant to this Directive and shall take all measures necessary to ensure that they are implemented. The penalties provided for must be effective, proportionate and dissuasive. Member States shall notify those provisions to the Commission by [[date for transposition at the latest and shall notify it without delay of any subsequent amendment affecting them.
Amendment 197 #
Proposal for a directive
Article 2 – paragraph -1(new)
Article 2 – paragraph -1(new)
Directive 2013/34/EC
Article 18 a (new)
Article 18 a (new)
The following Article is inserted: “Article 18a Additional disclosure for large undertakings; In the notes to the financial statements, large undertakings shall, in addition to the information required under Articles 16, 17 18 and any other provisions of this Directive, disclose information in respect of the following matters, specifying by Member State and by third country in which it has a subsidiary: a) name(s), nature of activities and geographical location; b) turnover; c) number of employees and gender ratio on a full time equivalent basis; d) profit or loss before tax; e) tax on profit or loss; f) public subsidies received. g) the extent of stranded assets on the balance sheets of companies with whom they have made investments 2. Undertakings whose average number of employees on a consolidated basis during the financial year does not exceed 500 and, on their balance sheet dates, do not exceed on a consolidated basis either a balance sheet total of 86 million euros or a net turnover of 100 million euros shall be exempt from the obligation set out in paragraph 1 of this Article. 3. The obligation set out in paragraph 1 of this Article shall not apply to any undertaking governed by the law of a Member State whose parent undertaking is subject to the laws of a Member State and whose information is included in the information disclosed by that parent undertaking in accordance with paragraph 1 of this Article. 4. The information referred to in paragraph 1 shall be audited in accordance with Directive 2006/43/EC1a. 5. The Commission shall conduct a general assessment as regards potential economic consequences of the public disclosure of this type of information, including the impact on competitiveness and investment. The Commission shall submit its report to the Council and the European Parliament by 31 December 2015. __________________ 1a Directive2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC (OJ L 157, 9.6.2006, p. 87).
Amendment 198 #
Proposal for a directive
Article 2 a (new)
Article 2 a (new)
Directive 2004/109/EC
Article 16 a (new)
Article 16 a (new)