Shareholder identification is crucial for listed companies as it enables effective engagement with their current investor base, but historically often commanded limited attention due to the difficulty of the ID process, with corporates having relatively limited access to information outside of very large shareholders. However, knowing who your shareholders are is the key to anticipating future market movements, informing your IR strategy and ultimately controlling your company’s future.
For IR professionals and listed companies in Europe, identifying shareholders has historically been a complex and costly process. However, the implementation of the Shareholder Rights Directive II (SRD II) in 2020 has dramatically changed the landscape, making shareholder identification much easier and more cost-effective. In todays blogpost we explore how SRD II has transformed this crucial aspect of investor relations and how Clearhart can help you benefit from these changes.
The Pre-SRD II Era
Prior to SRD II, companies often struggled to obtain accurate and up-to-date information about their shareholders, particularly in cross-border situations. The process was time-consuming, expensive, often incomplete (particularly for smaller shareholdings) and inconsistent across different European jurisdictions.
Enter SRD II: A Game-Changer for Shareholder Identification in the EU
SRD II came into effect in September 2020 and has introduced several key changes which have significantly improved and simplified the shareholder identification process:
- Right to Identify Shareholders: SRD II gives companies the explicit right to identify their shareholders. This is a fundamental shift, empowering companies to proactively seek out this information.
- Standardized Process: The directive establishes a standardized process for shareholder identification requests, making it easier for companies to obtain information across different European markets.
- Quick Response Times: Intermediaries are now required to respond to identification requests promptly, often within 24 hours.
- Lower Thresholds: While member states can set minimum thresholds for identification requests, these cannot exceed 0.5% of shares or voting rights. This allows companies to identify a much broader base of their shareholders.
- Uniform Data Format: SRD II mandates the use of standardized data formats, facilitating easier processing and integration of shareholder information.
Benefits for IR Professionals and Companies
The implementation of SRD II has brought several advantages:
- Cost Reduction: Standardized processes and formats have significantly reduced the cost of shareholder identification.
- Improved Accuracy: More frequent and comprehensive identification leads to more accurate shareholder data.
- Enhanced Engagement: Better shareholder identification enables more targeted and effective investor engagement strategies.
- Cross-Border Simplification: The uniform approach across Europe has simplified the process for companies with international shareholders.
Clearhart’s Value-Added Analysis
While SRD II has made raw shareholder data more accessible, its true value lies in the interpretation and analysis of this information. Clearharts expertise in this area means that our team can offer you an incremental layer of analysis on top of the raw data, enabling:
- Recommendations for targeted investor engagement strategies
- Identification of potential activist investors
- Benchmarking against country and sector peers on shareholder concentration and country concentration
By combining the improved data accessibility provided by SRD II with Clearhart’s expert analysis, companies can gain a deeper understanding of their shareholder base and make more informed IR decisions as a result.
Looking Ahead
While SRD II has greatly improved shareholder identification in Europe, it’s important to note that the directive is still relatively new. As companies and intermediaries continue to adapt to the new regulations, we can expect further refinements and improvements in the process. It’s also important to note that the implementation is not yet perfect across Europe, with a small minority of countries (e.g. Netherlands, Italy, Austria) still maintaining the 0.5% threshold for shareholder identification, potentially limiting the completeness of ownership information available to companies.
Let Clearhart Help You Get Started
If you would like to take advantage of the shareholder identification revolution brought about by SRD II in order to gain greater insights into who your shareholders really are, then contact Clearhart. We can guide you through the process, from obtaining the raw data via our provider, to an in depth analysis of your shareholders with actionable insights. Let us help you to transform your approach to shareholder identification and engagement.