From SRD II to SRD III

Key recommendations included publishing the shareholder definitions in force within the EU, offering greater flexibility to issuers in targeting identification requests by geography or ownership level, harmonising key dates for general meetings, systematising hybrid general meetings while prohibiting purely virtual formats, automating electronic voting confirmation, and developing a monitoring mechanism for effective SRD II compliance across the Union.

The High-Level Forum on Justice for Growth

In 2025, DG Justice and Consumers brought the SRD review into the broader framework of the High-Level Forum on Justice for Growth, launched jointly by the Commission and the Polish Council Presidency to examine how civil and company law can support European competitiveness. The second plenary session (12 May 2025) was dedicated to the possible revision of the Shareholder Rights Directive, supported by a discussion paper from the Commission services. Participants broadly agreed that the current framework is inefficient, especially in cross-border situations, and that it needs to be simplified, modernised through digitalisation, and standardised. The Forum’s concluding report carried forward these findings.

The Political Mandate for Reform

The SRD review is now embedded in two overarching Commission strategies. The Savings and Investments Union Strategy (19 March 2025) identified a potential review of the Shareholder Rights Directive by Q4 2026 as part of its agenda to remove fragmentation and deepen cross-border capital market integration. The 2026 Commission Work Programme (21 October 2025) subsequently confirmed both an evaluation of the Shareholder Rights Directive and a new legislative initiative to strengthen shareholder rights, each scheduled for Q3–Q4 2026.

Public Consultation and Call for Evidence (February 2026)

On 11 February 2026, the European Commission launched a public consultation and call for evidence on the evaluation and potential review of the Shareholder Rights Directive (Ref. Ares(2026)1540631). The initiative is formally titled “Update of the rules on shareholder rights: evaluation and review of the Shareholder Rights Directive” and is led by DG Justice and Consumers (Unit A.3, Company Law). It envisages a legislative initiative, with indicative planning for Q4 2026.

Areas of Focus

The Call for Evidence frames the initiative around the fragmentation of EU capital markets, which imposes high administrative and financial burdens on issuers, investors, and intermediaries operating across the Single Market. Drawing on issues that stakeholders have brought to the Commission’s attention, it sets out three broad areas that the initiative intends to focus on:

1. Shareholder identification, transmission of information, and exercise of shareholder rights. Stakeholders have pointed to differences in shareholder definitions across Member States, a lack of clarity as to which financial instruments are covered, and inefficiencies in identification and voting processes that continue to create operational complexity. All stakeholders struggle with time-consuming voting processes, particularly in cross-border scenarios. Issuers face high compliance costs in shareholder identification, while intermediaries incur significant costs in managing proxy votes and information flows.

2. Transparency of institutional investors, asset managers, and proxy advisors. Stakeholders have pointed to a lack of clear oversight for the cross-border provision of proxy advice, and to a lack of clarity in the definition of proxy advisors.

3. Format of general meetings and the rights exercised by shareholders in connection with those meetings. Obstacles remain to shareholders being able to participate fully in general meetings, whether in person, in hybrid format, or virtually. These include divergent requirements for proof of entitlement and powers of attorney, inconsistent deadlines for key meeting dates, and the imposition of fees that can be particularly burdensome for retail investors.

The Commission notes that these areas share a common root in the inefficiencies, high costs, and challenges posed by cross-border operations, driven in part by the absence of a common response to digital developments in the market. The formal problem definition will be developed on the basis of the evaluation and the consultation activities.

Objectives and Proposed Fields of Action

The general objective is to boost the competitiveness of EU listed companies and simplify procedures for financial market participants. The Call for Evidence identifies two principal fields of action. The first concerns improving corporate governance through digital technologies: this could include ensuring that shareholder rights and legal certainty are respected in the case of virtual participation in general meetings, streamlining timelines and deadlines, and strengthening the quality and reliability of proxy advisors’ voting recommendations. The second concerns facilitating the flow of information and exercise of rights between companies, intermediaries, and shareholders: this could include providing common rules to automate the exchange of information, exploring solutions for direct communication between shareholders and companies, tackling dissuasive cross-border costs, and ensuring that proof of entitlement and powers of attorney are accepted across borders in electronic format.

The specific policy options will depend on the outcome of the evaluation and the impact assessment, with each identified problem potentially addressed through no action, better implementation and enforcement, targeted amendments within the current framework, or more far-reaching structural changes. The evaluation will be conducted back to back with an impact assessment and will examine effectiveness, efficiency, relevance, coherence with other EU and international instruments, and EU added value. The consultation questionnaire is open until 6 May 2026.

Towards SRD III: The Reform Agenda

Building on the ESMA/EBA review, the Commission’s own assessment, the High-Level Forum discussions, and the current public consultation, the Commission is preparing a legislative proposal for a successor directive. The Call for Evidence groups the problems to be tackled into four broad areas: the identification of shareholders, the transmission of information, and the exercise of shareholder rights; the transparency of institutional investors, asset managers, and proxy advisors; the format of general meetings and the rights exercised by shareholders in connection with those meetings; and the related costs and administrative burdens. Several cross-cutting themes have emerged in the policy discussion.

The absence of a harmonised definition of "shareholder" across the EU remains a fundamental obstacle. The term is defined differently by national company law, securities law, and tax law in each Member State, creating legal uncertainty and operational complexity in the intermediary chain. The ESMA/EBA report noted that 56 per cent of respondents favoured "beneficial shareholder," while others preferred different formulations. Any harmonisation effort will need to reconcile these divergences while serving the practical needs of issuers, intermediaries, and investors.

The regulation of proxy advisors is another area where SRD III is expected to go further than the current comply-or-explain framework. The proxy advisory industry is itself undergoing significant structural change: Glass Lewis has announced plans to phase out its single benchmark voting policy in favour of a platform model, stewardship teams at major asset managers are splitting into distinct units, and the emergence of pass-through voting programmes is reshaping how voting power is exercised in pooled fund structures. These developments raise questions about whether the EU regulatory framework should accommodate or actively shape the evolving ecosystem.