More long-term shareholder engagement in listed companies

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1. Fund management companies, venture capital managers and investment firms that manage portfolios must publish an engagement policy: how they monitor the companies they invest in, how they vote at shareholder meetings and how they handle conflicts of interest. If they do not comply, they must publicly explain why.
2. Listed companies will be able to learn the identity of their shareholders and also of the ultimate beneficiaries, that is, the people really behind the shares when they are held through intermediary entities. Personal data remains protected under data protection rules.
3. Proxy advisors (firms that advise investors on how to vote at shareholder meetings) are regulated for the first time: they must notify the CNMVCNMV Comisión Nacional del Mercado de Valores, the public body that supervises the securities markets in Spain., publish a code of conduct, an annual report on their methods and sources, and disclose their conflicts of interest.
4. Control over directors' pay is strengthened: the remuneration policy is approved by the general meeting for a maximum of three years, and the annual remuneration report is subject to an advisory vote and becomes more detailed.
5. A new related-party transaction regime is created for listed companies: significant transactions with people close to the company must be publicly announced and approved by the general meeting or the board, with a prior report from the audit committee. Shareholders with a conflict of interest may only vote if the board approved the transaction without the dissenting vote of a majority of independent directors.
6. Loyalty shares with double voting rights are introduced: listed companies may grant in their bylaws an additional vote to those who hold their shares for at least two years, to reward long-term investment.
7. It becomes easier for companies to raise capital: the minimum period for exercising pre-emptive subscription rights is reduced from fifteen to fourteen days, exclusion of that right is relaxed for issues below 20% of capital, and new shares may be delivered before the capital increase is registered in the Mercantile Registry.
8. Listed companies are no longer required to publish quarterly financial information, although the CNMV may require it in certain cases. Bylaws may also authorize general meetings held entirely by electronic means.

Who it affects

• Listed companies: New transparency duties: identifying shareholders, publishing related-party transactions, more detailed remuneration reports, and the option of electronic meetings and loyalty shares.
• Shareholders of listed companies: More information and control over management and directors' pay, and possible advantages if they hold their shares long term.
• Fund managers and investment firms: They must publish an engagement policy and report annually on how they vote and handle conflicts of interest.
• Proxy advisors: For the first time they are subject to transparency obligations before the CNMV and their clients.
• Employees: Listed companies must report on the mechanisms they have to promote employee involvement in company management.

Words worth knowing

Sociedad cotizada

A company whose shares are bought and sold on the stock market.

Operación vinculada

A transaction the company makes with people or companies close to it, such as its directors or large shareholders.

Derecho de suscripción preferente

The right of current shareholders to buy new shares before anyone else, so they do not lose their percentage of the company.

Beneficiario último

The person on whose behalf an intermediary registered as shareholder is really acting.

CNMV

Comisión Nacional del Mercado de Valores, the public body that supervises the securities markets in Spain.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries