Shareholder Rights Directive: New Regulations to Provide Confirmation of Shareholders’ Votes

The Companies (Shareholders’ Rights to Voting Confirmations) Regulations 2020 (“Regulations”) have been published and are due to come into force on 3 September 2020. The Regulations complete the UK’s transposition of Chapter 1a of EU Directive 2017/828 (amending Directive 2007/36/EC), or more commonly known as the Shareholder Rights Directive.

New rule

The Regulations apply to “traded companies”, which is defined in section 360C of the Companies Act 2006 (“Act”). Companies which have their shares listed on the Official List of the Financial Conduct Authority and traded on the Main Market of the London Stock Exchange will satisfy the definition. The Regulations will require traded companies to comply with additional obligations, which will be added into the Act as sections 360AA and 360BA:

1. Where a vote is cast on a poll by electronic means, a traded company must send a confirmation of receipt of such vote to the shareholder who casts the vote. This also includes a proxy or a representative (as authorised by section 323(1) of the Act) who casts the vote in the shareholder’s place.
2. A shareholder can request information from the company to enable the shareholder to determine that their vote at a general meeting has been validly recorded and counted. A company must comply with such a request if:
   • The shareholder makes a request for the information no later than 30 days from the date of the general meeting; and
   • The member has no other reasonable means by which to determine that their vote has been validly recorded and counted by the company.

Practical implications
Companies which are “traded companies” for the purposes of the Act must ensure that they have adequate processes in place before the Regulations come into force in September. It is suggested that a system which provides automated tailored receipts for a vote cast by a shareholder/proxy/representative is implemented. This is because any confirmation of receipt of a vote must be provided to the relevant shareholder as soon as reasonably practicable.

It is also suggested that a duplicate copy of such receipt is retained by the company, with an electronic record of how the vote was recorded and counted, maintained and kept. This is essential as upon receipt of a shareholder’s request, confirmation that their vote was recorded and counted must be provided within 15 days beginning with whichever is the later of the first working day after the day on which the request is received by the company or the result of the poll is declared.