SRD II transposition provokes buoyant public discussion in Slovenia
The Ministry of Economic Development and Technology of the Republic of Slovenia is finalising the proposal for amendments to the Companies Act (ZGD-1K), which will transpose Shareholder Rights Directive II into Slovenian legislation.
The new legislation, whose draft was published on the Ministry’s website in order to facilitate public discourse, was planned to be implemented by the second quarter of 2019. However, it has been delayed due to the emphatic and vast response from the public.
The proposal for the new Companies Act seeks to transpose into Slovenian law the provisions of the Directive on the encouragement of long-term shareholder engagement, as well as certain other changes. The following topics are covered by the proposed amendments:
- identifying shareholders, providing information and facilitating the exercise of shareholder rights,
- transparency of institutional investors, asset managers and voting advisors,
- penalties for non-disclosure of shareholders,
- new standard for defining the record date,
- change of process for registering participation in a General Meeting,
- remuneration policy of directors,
- transparency and approval of related party transactions,
- new restrictions on creating/establishing legal entities in order to prevent abuses in starting a new business.
In addition to that, the new Companies Act proposes a number of other changes. We have identified those subjects which we consider important for foreign investors:
- identifying shareholders: a disclosure of the final beneficial owners for assets held on fiduciary accounts is required
- change of process for registering participation in the General Meeting: securities account holders will no longer have to complete and sign the forms for participation/proxy (MT565 instruction will suffice); no documents from the account holder will be required
- as a new standard for defining the record date -according to current legislation, the record date and deadline to register participation in the General Meeting is the same day (4 days before the GM), while the new law proposes to move the record date to 7 or 14 days before the General Meeting
There are still pending items in the legislation proposal, such as:
- unclear/inconsistent definition of owner of shares (shareholder/intermediary/final beneficial owner)
- should the record date be 7 or 14 days before the General Meeting?
It is expected that the final draft of the new Companies Act will be prepared by the end of 2019 and the new law should come into force in the first quarter of 2020.
Technical details on how the local CSD (KDD d.d.) will implement the legislation requirements are not yet known.
The market expects that KDD will provide further information by the end of 2019. According to KDD, the implementation of SRDII requirements is going as planned.
Vojislav Kecojević, Relationship Manager, GSS Slovenia