The amendments to the “Law on Companies” relates to minority shareholders' rights protection and to the creation of preconditions for closing the Negotiation of Chapter 6, which relates to the accession to the EU. The law has been harmonized with the provisions of the Directive (EU) 2017/828 regarding the encouragement of long-term shareholder engagement (SRD II).
The main changes to the Law include, but are not limited to:
- the definition of the protection of interests of companies and shareholders in transactions and activities in which there are personal interests;
- increasing the transparency in relation to the remuneration policy of the company's directors and members of the supervisory board;
- ensuring that the approval and the announcement of significant related party transactions must be conducted in accordance with the procedures that prevent the abuse of position as well as providing adequate protection of the interests for the company and its shareholders;
- introducing the definitions of institutional investor, asset manager and proxy advisers under the Law, their obligations as well as policies of engagement for institutional investors and asset managers;
- regulating the procedure of shareholder identification with the aim to improve the transfer of information along the chain of intermediaries;
- introducing the concept of “economic offence” towards institutional investors, asset managers, voting advisers and intermediaries.
Changes to the Law will become effective as of 27 November 2021. The provisions related to institutional investors will be applicable as of 1 June 2022 while the provisions concerning shareholder’s information engagement (SRD II) shall apply from the date of accession to the European Union.
Impact on Investors: Clients should take note of the above changes. Harmonization of the local Law on Companies with the EU regulations will allow for greater transparency and protection of the rights of companies and shareholders.