Summary of the ONLINE Debate on “Implementing the EU Directive on Shareholders’ Rights”


On Thursday, June 6, 2019, ARIR (The Romanian Investor Relations Association), together with representatives of the BVB (Bucharest Stock Exchange), of the business environment and lawyers, gathered for a discussion on the draft law implementing several European directives and regulations, published by the Ministry of Finance on June 5th.

The debate addressed main provisions and novelties of the proposed project of the law, as well as the potential impact on the listed companies. The most important subjects covered the amendments brought by this draft law in the area of transactions with affiliates and of the remuneration policy.

Concerning the transactions with affiliates, the directive brings two important changes: the obligation to have the significant transactions with affiliates approved by the Board of Directors and the method of reporting these transactions. According to Diana Ispas, Partner BONDOC SI ASOCIATII, the method of implementing the directive was not in the most demanding form. She stated this considering the fact that the directive provides approximately 7 categories of options that Member States have at their disposal to implement it, and some of them significantly complicate the approval process of the transactions with affiliates.

Regarding the obligation of approving the significant transactions with affiliates by the Board of Directors, the draft law reproduces quite accurately the provisions of the directive, the novelty being related to the materiality criteria, namely how we define a significant transaction. It was chosen to go on a criteria of 5% of the issuer’s total income to define this type of transaction. According to Diana Ispas, it is debatable to what extent this criterion is too low or too high; there are several materiality criteria to which we can refer to in the Issuer’s Law, also in other states a similar criterion is being pursue, although, for example, in UK it has been an attempt to raise the threshold to 25%. As for this provision, it is still to be clarified and detailed how the 5% threshold applies from the total income of the issuer. It was discussed weather the total income will be according to the individual or consolidated financial statements, if it will be applied to the income of the latest annual or quarterly financial reporting.

Regarding the remuneration policy, Narcisa Oprea, Partner SCHOENHERR SI ASOCIATII, states “unfortunately, we are on an ultra-fast route, the term for consultations is not generous, it is true that we are also very late in terms of transposing the Shareholders Directive 2.” She considers that “the more analyses and discussions are being held, even in this extremely tight time-frame, the greater are the chances to clarify as many things as possible or at least anticipate what solutions should be achieved through the regulations given into application”. Going into details, the draft law stipulates that each issuer whose shares are admitted to trade on a regulated market should have a remuneration policy that needs to be approved by the shareholders. This is something new, so far each issuer has addressed this topic in different manner as there were no legal provisions regarding content and approval by shareholders.

It is also mentioned that the remuneration policy should have a minimum content and, of course, considering that it becomes binding by the Law, there will be consequences if this obligation is not respected.

The draft law provides a high level of detail – so it is not enough to say that I have a fixed component and a variable component of the remuneration of the Board or Directors, you have to be extremely explicit regarding the weight of these components. Also, according to Narcisa Oprea, an important added value for investors is that this remuneration policy must include the performance criteria for the variable component.
It is also necessary to provide an explanation on how this structure of the remuneration policy of the issuers is correlated, concordant and supports the achievement of the company’s long-term interests, its sustainability and long- term viability. Afterwards, a remuneration report must be drafted and submitted for consultation within the General Shareholders meeting.


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