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SRD II: A Review of the Shareholder Transparency Landscape
In 2020, the Shareholder Rights Directive II (SRD II) was introduced across European Union member states.
Building on the original Shareholder Rights Directive (SRD I) from 2007, it introduced binding requirements across five areas: shareholder identification, the facilitation of shareholder rights, the transmission of information through intermediaries, transparency of proxy advisors, and director remuneration.
The first and second directive was a step in the right direction but was not without its challenges.
As the European Commission just closed their public consultation and call for evidence to evaluate and potentially overhaul of SRD, we wanted to share our perspective and review of the directive.
Related resource: For a deeper look at how SRD II shapes corporate action notice requirements and disclosure timelines for intermediaries, see our article on SRD corporate action notices.
Six unforeseen challenges under SRD II
Over five years after implementation, the market has learned that meeting the letter of SRD II and meeting its spirit are two different things. Four challenges, in particular, were not fully anticipated at the outset.
1. Implementation varies by jurisdiction
SRD II is applied differently across EEA member states, based on their own national company law.
The definition of “shareholder” varies by jurisdiction: some markets recognise the end investor as the shareholder, while others treat the name on the register, typically a nominee account, as the legal shareholder.
The spirit of SRD II is clearly to identify the underlying beneficial owner, but the current framework still leaves room for inconsistent interpretation.
Moreover, disclosure thresholds are not consistent. Some markets require identification only above a 0.5% holding threshold. Others permit identification of any shareholder with a single share.
Some markets extend the scope of SRD II beyond equities incorporated in an EEA member state.
For cross-border holdings, where an issuer is incorporated in one country but listed in another, the uncertainty about which rules apply adds significant operational complexity.
With regard to voting, the differences around record dates, Power of attorney (PoA) and certificate of holding requirements by market add delays and hinder participation, with studies showing that less than 50% of retail investors were able to vote at foreign AGMs.
2. Every request needs validation; delaying the response
Not all disclosure requests come through a trusted source.
At the outset, it was assumed issuers would initiate requests through the Issuer’s Central Securities Depository (CSD), as First Intermediary, who in turn, would disseminate through the Custody Chain , enabling STP processing.
However, many requests are sent directly to intermediaries, bypassing the standard custody chain, shifting the burden of validation onto each intermediary individually.
Without proper checks, there is a real risk of sharing sensitive client data in response to unauthorised or unauthenticated requests.
Good quality ‘Security reference data’ and regulatory compliance expertise are both critical to validate requests correctly.
For issuers using automated platforms, the ability to authenticate requests at source removes this risk entirely. However, this is not the case for many in the region.
3. Inconsistent data format requirements
SRD II mandates ISO 20022 messaging via SWIFT, but many intermediaries still rely on ISO 15022, requiring costly upgrades.
Some issuer CSDs use alternative channels, including SWIFT Closed User Groups or FileAct, rather than the standard pathway.
Legacy local platforms in certain markets require additional fields beyond what SRD II’s Level 2 Text specifies, resulting in fragmented infrastructure and inconsistent implementation across the chain.
This is one of the clearest areas where the regulation has not yet delivered on its promise of standardisation. Until ISO 20022 adoption is near-universal across the custody chain, fragmentation will persist.
4. Legacy systems cannot keep up
SRD II sets strict deadlines, but the systems behind those deadlines in many firms were not built for the pace of response required.
It also sets the requirements for how meeting notices and voting instructions should be transmitted.
The reality is that many CSDs have still not implemented ISO 20022 messaging for proxy voting events, meaning meeting notices in some markets are still transmitted through legacy batch channels.
Votes arrive late in many markets where batch processing still exists, and post-meeting vote confirmations are still not universally available, meaning investors cannot always verify that their vote was counted.
As Jonathan Smalley, COO and Co-Founder of Proxymity, has noted: “It is pretty common for all sorts of reasons for custody clients to use a range of providers, but this can present a challenge for day-to-day management and oversight as well as introducing operational complexity where proprietary systems are in use or providers have deviations or variance in service levels.”
5. Proxy advisor transparency has not kept pace with market influence
SRD II brought proxy advisors into regulatory scope for the first time, requiring disclosure of methodologies, conflicts of interest and engagement policies on a comply-or-explain basis. But market participants, including Proxymity, ESMA and the EBA concluded the provisions produced only marginal improvements in transparency. The voluntary Best Practice Principles lack a monitoring mechanism, no consistent compliance standard exists, and a de facto duopoly in the advisory market gives two firms disproportionate influence over voting outcomes across Europe.
For issuers, the more immediate frustration has been the absence of structured dialogue. There is no consistent mechanism for companies to correct factual errors in proxy advisor reports before investors act on them. This is a gap that sits directly upstream of the governance decisions shareholders are being asked to make.
6. Say-on-pay exists across the EU but it does not mean the same thing everywhere
SRD II introduced mandatory shareholder votes on remuneration policy and reports across member states. In practice, the decision to leave member states free to determine whether the vote is binding or advisory created a patchwork that has limited its effect. France applies binding votes on both policy and report. Ireland adopted an advisory approach. The Netherlands requires 75% approval for remuneration policy to pass. The same institutional investor faces materially different legal consequences for the same type of rejection depending on the market they are voting in.
The operational layer compounds this. A say-on-pay vote only functions as intended if the shareholder’s instruction arrives, is processed correctly and is counted before the meeting closes. The same operational gaps affecting governance and ESG resolutions, late ballots, compressed deadlines, lost votes in the custody chain, affect remuneration resolutions equally.
Related resource: For more on how connected infrastructure addresses these challenges, see our piece on achieving good corporate governance with centralised, real-time connectivity.
The SRD II reform consultation: what market participants are telling the European Commission
SRD II improved transparency and shareholder rights in meaningful ways. But the market’s experience since 2020 has made one thing clear: fragmentation still exists across member states and therefore remains a significant obstacle, and the framework as currently structured cannot fully deliver on its objectives without further harmonisation.
The European Commission recognised this in February 2026, when it launched a formal public consultation and call for evidence on a potential review and overhaul of the Shareholder Rights Directive. The consultation closed on 6 May 2026. The findings are expected to feed into a potential legislative proposal, referred to in the market as SRD III.
A number of significant market participants submitted formal responses before the deadline, including the UN Principles for Responsible Investment, Eurosif, and the Institutional Investors Group on Climate Change.
Read Proxymity’s complete response to the consultation here.
The consultation focused on many areas and exposed several needs in the market:
A single, EU-wide definition of shareholder
The market wants the ambiguity resolved once and for all. A common definition, anchored to the beneficial owner, should apply across the entire directive, not just for identification purposes. Without it, the same request yields different results depending on the jurisdiction involved.
Universal access, even in cross-border settings
The market is calling for increased interoperability across market infrastructures, implemention standardised protocols, harmonised timelines, and the removal of operational barriers and disproportionate processing fees that currently prevent shareholders from exercising their rights across borders.
The market is also demanding more transparency, especially in regard to the costs charged by intermediaries.
Clear, consistent rules for digital general meetings
The market wants a hybrid-first framework with minimum EU-wide standards that protect shareholder rights regardless of meeting format, giving companies and investors certainty in a digital environment.
Mandatory ISO 20022 implementation
Encouragement has not been enough. The market wants the Commission to mandate ISO 20022 as the standard for all shareholder communications, enabling straight-through processing and eliminating the manual interventions that slow the chain.
While migration is an extensive effort, Dean Little recommends a “buy now, build later” approach i.e integrating with compliant providers can help ease the transition more efficiently, without a heavy cost burden.
Stronger accountability for proxy advisors
The market is calling for greater accountability and transparency in the proxy advisory market, including clearer definitions of who qualifies as a proxy advisor under a possible SRD III, a structured dialogue process allowing issuers to correct factual errors before voting deadlines, and a review of market concentration. Participants like ESBG cautioned that any new requirements should avoid increasing costs or limiting access given the sector’s concentration.
Binding say-on-pay across all member states
Market participants called for shareholder votes on director remuneration to be made binding across all member states, removing the discretion that created the current patchwork. Respondents also called for stronger disclosure on how ESG criteria are integrated into variable pay, as sustainability metrics become increasingly central to how institutional investors assess remuneration frameworks.
The message to the commission is consistent: harmonisation, standardisation, and enforcement are the conditions for SRD III to deliver what SRD II could not.
What good looks like: real-time, connected infrastructure
Participants managing SRD II compliance most effectively have invested in infrastructure that handles both shareholder identification and proxy voting as continuous, automated processes, rather than treating them as separate obligations managed through different systems.
For proxy voting: real-time connectivity between issuers and investors, from meeting announcement through to vote confirmation, with no manual intervention at each step in the chain.
Solutions like Proxymity Vote Connect enables this for issuers and intermediaries across more than 105 markets, transmitting meeting notices and voting instructions in real time, providing confirmed vote receipts, and giving both sides of the chain genuine visibility into the process. For issuers, that means understanding how shares are being voted as it happens, not after the meeting closes. For intermediaries, it means meeting SRD II’s transmission obligations without the manual effort that makes compliance costly.
For shareholder identification: a platform that can distribute disclosure requests through the custody chain, authenticate responses, and return reconciled beneficial owner data within minutes rather than daysthrough an automated workflow.
Proxymity Shareholder Insights provides issuers with a real-time view of their beneficial owner base, with initial reports available within minutes of a request being distributed.
Relate resource: For issuers wanting to understand how real-time shareholder data transforms investor relations more broadly, our piece on digital shareholder analysis covers the practical impact in depth.
For intermediaries, Proxymity Shareholder Disclosure automates authentication, processes requests in multiple messaging formats, and forwards requests to downstream intermediaries in real time, removing the requirement for full ISO 20022 migration as a precondition for compliance.
“SRD II has strengthened transparency and shareholder rights across the EU, but inconsistent implementation between member states continues to limit what the directive can achieve. At Proxymity, we see every day the difference that connected, real-time infrastructure makes for issuers and intermediaries navigating these obligations and we believe the reform process is an opportunity to embed that standard across the market.” — Nigel Little, Head of Commercial, Proxymity
SRD III: an opportunity to unlock real connectivity
We’re getting closer to having a standardised model for share ownership transparency throughout Europe, but we’re not quite there yet as evidenced by the market.
Morningstar’s research showed that the largest European asset managers have consistently supported over 95% of ESG resolutions over half a decade.
As our Chief Product Officer, Andrew Myers, highlighted in his recent feature, Europe has the stewardship culture and sophisticated market participants that could benefit from a digital ecosystem.
However, until the needs of the market are met in the next revision of the directive, that ambition can’t be achieved.
Participants get can ahead of whatever comes next by investing now in real-time, connected infrastructure, so that compliance is built into how they operate, not bolted on when a new directive takes effect.
Get in touch with our team to explore our SRD II solutions and find out what audit-ready, real-time connectivity looks like in practice.