SRD II implementation on the right track


The upcoming AGM season is the first big test.

On 3 September 2020, the last elements of the amended Shareholder Rights Directive (SRD II) came into force, providing better opportunities for shareholders to exercise their shareholder rights and for issuers to identify their shareholders. Gradually, common, standardised solutions are taking shape across the EU, and shareholders and issuers can take advantage of new communication and information channels. In this article, we give an update on the SRD II implementation.


The three areas covered by the implementation of the remaining elements of SRD II on 3 September 2020 are: companies’ right to identify their shareholders, shareholders’ right to be informed about general meetings and other corporate events, and shareholders’ right to participate and vote.

“We have now come a long way with the implementation of SRD II, but due to complexity, both nationally and across the EU, we have not finished the project yet. However, as we move ahead, we are all getting more insight and experience, and we are taking important steps towards the realisation of the overarching goal – namely to make it easier for all shareholders to exercise their shareholder rights,” says Morten Skanning, Senior Product Manager at VP Securities.

Companies’ right to identify their shareholders

In the period since September 2020, two Danish companies have requested identification of their shareholders.

“The limited use of this opportunity is likely due to the fact that it is still new and processes are not yet 100% in place for everyone involved. We expect to see increased volume in these requests during the 2021 AGM season. Going forward and as the market matures, we are convinced there will be considerable interest in shareholder identification as it is an important tool for companies to know the composition and development of their shareholder base,” says Morten Skanning.
As an additional service to all companies that have issued and registered their shares with VP, VP has developed a new solution, named VP Collector. The new solution will be available by the end of Q1 2021 – in time for the AGM season. Read more about the solution here.

Shareholders’ right to be informed about general meetings and other corporate events

In the period from September 2020, approximately 30 VP customers have used the new set-up for general meeting notification initiated by the issuing agent and sent from VP to end investors. However, the 2021 AGM season is at hand, and within the next few months most companies will have tried out the new set-up.
Companies need to be aware of the new framework when planning their next AGM or announcing other corporate events, and must make sure that they initiate dialogue with their bank/issuing agent in due time before the corporate event takes place – and, as usual, that they are also in dialogue with their shareholder registrar before the AGM.

In terms of the format of the convening notice for the AGM, companies should be aware that there will be less room for company-specific structures and free text content, since the content must be adapted to the ISO message format in which the notice will be forwarded to end investors. Furthermore, the convening notice and proposals must be prepared in English, for uploading to the VP platform that is used to forward the information to other intermediaries.

The new set-up means that all shareholders, whether they are retail or institutional shareholders, now have the same access to information about corporate events across EU companies. This is a significant achievement for retail shareholders in particular – making their exercise of their shareholder rights much easier.

says Morten Skanning.


Shareholders’ right to participate and vote

The technical development of a cross-border solution for proxy voting flow has been more complex than expected due to the co-dependencies between the different multi-purpose messages and the overall complexity involved in aligning the entire market to one standard.

Until the full flow is available, VP has implemented an interim solution which is an adapted version of the pre-SRD II processes, and which gives all end investors access to all SRD II services. For example, it is now possible for all end investors to receive a confirmation message when their vote is recorded and counted.
The implementation of the automated ISO message solution is expected to take place before the 2022 AGM season.

“The first big test of the new SRD II functionalities is the upcoming AGM season. We are in the middle of an important learning process, where processes and systems are continuously being adapted – and improvements are still needed. Therefore, VP continues to be in close dialogue with our customers in order to create the best possible solutions for them and for our issuers,” Morten Skanning concludes.


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