The Shareholders' Rights Directive (SRD2) aims to promote electronic voting by retail clients

The European Commission’s ‘limited consultation’ closed in June 2024 highlights the limited effects of implementing SRD2 for retail clients given the high costs of cross-border voting. Indeed, the volumes are not yet there.

This new ‘limited consultation’ sought to assess the advantages and limitations of applying the provisions of the various shareholder rights directives. It aimed primarily at assessing costs in the broad sense: implementation costs, operating costs resulting from the application of the requirements, observed tariff developments and possible improvement in transparency and effective proportionality. In view of these costs, the consultation questions try to highlight the benefits of implementing the measures related to SRD2, but the responses show the barriers that still need to be removed...

In the response of the association France Post-Marché (FPM), the main French post-market players propose a number of changes, and suggest in particular:

• The abandonment of local procedures requiring paper-based documentation certifying beneficial ownership of securities, since the chain of intermediaries guarantees such ownership,

• The management of the role and responsibilities of certain actors such as collectors of instructions for pre-general meeting voting (AG) or suppliers of shareholder identification services,

• Remote live attendance at AGs,

• Systematic offer by companies with a large shareholding to transmit votes electronically before the AG is held and not a mere announcement of the AG in electronic format.

The Costly Reality of Cross-Border Retail Voting

FPM’s response to this consultation clearly shows that the implementation of SRD2 has had the effect of adapting existing cross-border connections for institutional clients to the reality of retail clients’ needs. However, these adaptations have resulted in an operating cost that is prohibitive in view of the volumes of instructions that are difficult to assess a priori and ultimately low despite the quality of the solutions deployed. SGSS can testify to its experience in its position as a pioneer.

Until 2019, the retail client only had electronic access to a limited scope of general meetings

Prior to the implementation of the SRD2 implementing acts in autumn 2019, only the institutional clients of European banks were serviced in this area, unlike retail clients. Electronic voting devices could exist locally, such as VOTACCESSR in France, but within limited perimeters in terms of eligible values. SGSS retail clients were able to benefit from this platform in particular.

Since 2019 SGSS has been offering wider access to GAs to its retail clients

In autumn 2019, the entry into force of the regulatory acts implementing the Second Shareholders’ Law Directive (SRD2) was aimed at improving the information and exercise of shareholders’ rights in Europe, in particular as regards participation in general meetings. It was an opportunity to significantly increase access to French general meetings by expanding the number of accessible transmitters.

SGSS clients then benefit through the Societe Generale portal from a smooth client journey, from the announcement to the vote. At the same time, access to information on general meetings of European foreign securities was made possible, without generating voting instructions from retail clients. In fact, low-volume proportionate devices have been implemented to comply with regulatory requirements.

In 2024 SGSS reaches a milestone with Spanish AGs

Since 2024 SGSS offers its retail clients in Spain a smooth electronic voting path.

Retail clients can now electronically receive information about a general meeting of a Spanish issuer on their Societe Generale portal and transmit their electronic voting instructions directly, provided that the issuer offers this possibility.

Through the implementation of “electronic highways” to facilitate participation in Spanish general assemblies, SGSS has thus been a pioneer in France.

With this first step in Spain, SGSS is showing its willingness to offer its retail clients a smooth digital route to access major European markets.