VP Securities is launching a new functionality that will collect shareholder disclosure information on behalf of issuers.
With this service, issuers will be able to use VP as a collector, which will greatly simplify the process of gathering shareholder information. The new service is expected to be launched in time for the Annual General Meeting season.
In September 2020, the Shareholder Rights Directive’s (SRD II) rules on shareholder identification and voting went into force. This means that listed companies now have the right to identify their shareholders and request intermediaries to provide relevant information about a company’s shareholders.
New directive replaces manual process
The current process of requesting and receiving this information is far from straightforward. “Today, each custody bank has to be contacted individually, which makes gathering shareholder information a time-consuming and manual process,” Helen Sørensen, Product Manager at VP explains. SRD II, however, stipulates that the data will be sent using straight through processing (STP), which enables VP to step in and offer a simpler and more efficient method of getting shareholder information on behalf of issuers.
The Collector solution
VP has developed a Collector solution, where VP collects the investor information from the custodial banks, gathers it into a comprehensive report and delivers that information to the requesting issuer. The solution is available to all companies that have issued and registered their shares with VP.
“As an issuer CSD, we’re able to use the technological infrastructure that SRD II has put in place,” says Helen Sørensen. “By using internationally recognized communication standards, we can bypass the manual work typically associated with gathering this information. We’re also used to handling personal data and already have methods in place for securely processing confidential information. So, it makes sense that we can, as a neutral party, collect this information and provide it to our customers in a report.”
Launch in Q1 2021
The new functionality will be available by the end of Q1, in time for the Annual General Meeting season. “We realise that this is where our customers will be most interested in using this type of service to identify their shareholders.” And according to Helen Sørensen, there is already considerable interest around this new functionality. “We’ve seen a great deal of interest from the companies that issue with us, and we already have a test customer lined up.”
A service with great potential
Concurrently, VP is working with the other Euronext CSDs to explore developing a pan-European solution that would be available to issuers in all of Euronext’s markets. VP is also looking into how to improve the usability of the shareholder information report. “Once we’ve gathered all of the shareholder information, the resulting report could be quite large in size. So, we’re exploring ways we could improve the readability of the report, perhaps by producing a summary or other high-level document,” Helen Sørensen says. There are a number of possibilities to improve and expand the service, once its implemented, and this helps to underscore the potential of applying technological innovation to fulfil a regulatory requirement. “I think this is a good example of how we can use our technical know-how to help issuers benefit from new legislation,” she concludes.
Fact box: About SRD II
In April 2019, the Danish Parliament adopted the amendments to the Shareholder Rights Directive, known collectively as SRD II. The purpose of these amendments is to stimulate shareholders’ long-term engagement, increase transparency in the voting process both in relation to proxy voting and shareholder identification and to improve the issuer-investor dialogue.
One of the ways SRD II increases transparency related to an issuer’s shareholder base is by establishing a standardized process for a collector to gather shareholder responses from intermediaries holding that information.
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