15 July 2014 – On 9 April 2014, the European Commission issued a legislative proposal amending the Shareholders Rights Directive (SRD) of 2007. ECSDA looks at the expected impact of the proposal on central securities depositories (CSDs), and highlights some issues for consideration by the European legislator.
To what extent will the revised Shareholder Rights Directive apply to CSDs?
CSDs, like other actors in the securities processing chain, have an important role to play in enhancing shareholder transparency and facilitating the exercise of shareholder rights, especially in cross-border situations. In fact, the obligations imposed on “intermediaries” under Chapter IA of the SRD Proposal will in some cases be relevant for CSDs, especially those CSDs providing shareholder identification services.
That said, due attention must be paid to the special characteristics of CSDs, and some clarifications might be needed as regards the applicability of the SRD requirements to CSDs.
- Why is CSDs’ role unique in relation to shareholder transparency?
CSDs are financial market infrastructures which act as the first entry point for newly issued securities, including company shares. They record the initial deposit of securities by an issuer and subsequently allow investors to deliver these securities against cash, i.e. to settle transactions in these securities. CSDs also maintain securities accounts at the top tier level of the holding chain.
The ECSDA paper analyses individual articles of the draft directive from a CSD perspective and explains some CSD specificities that should be taken into account during the legislative process and/or during transposition into national law. Our objective is to ensure that CSDs can continue to contribute to well-functioning and efficient shareholder identification processes in the EU.