Towards a broader model for identifying shareholders and holders in France
The implementation of SRD2 resulted in the replacement of the former shareholder identification process (known as “TPI”) by the “SRD2” process at the end of 2021 with a national regulatory framework that broadens the scope of eligible instruments. However, this enlargement could come up against other national provisions in some countries, such as bank secrecy.
Regulatory developments have led to the end of the former national "TPI" process in favour of a European "SRD2" process.
The legislative and regulatory landscape has changed a lot in recent years in terms of shareholder identification with a movement led by the second European Directive "Shareholder Rights" - (EU) 2017/828 – of 2017 (SRD2 or ShRD2), itself amending Directive (2007/36/EC) on shareholder rights.
This second Directive involved transposition into national law by each Member State before 10 June 2019 and the application of Implementing Acts (EU) 2018/1212, which entered into force on 3 September 2020, which lay down minimum requirements to comply with, in particular as regards the identification of shareholders.
Other legislative amendments to French law were implemented by the adoption of Law No. 2021-1308 of 8 October 2021 entitled “Miscellaneous provisions for adaptation to European Union law in the field of transport, environment, economy and finance”, published on 9 October and itself accompanied by an implementing decree no. 2022-888 of 14 June 2022 concerning the identification of shareholders, the transmission of information and the facilitation of the exercise of shareholders' rights.
A French broader scope of instruments eligible for the “SRD2” process of identifying shareholders in potential conflict with other national regulations.
In fact, the October 2021 text, immediately implemented, sounded the death knell of the so-called “TPI” procedure. Euroclear France nevertheless maintained the "TPI" system, under certain conditions until 31 December 2021, and has since moved to an "SRD2" process.
However, if “SRD2” does not allow to oppose national provisions such as banking secrecy for the instruments provided for in the scope of the directive (namely shares issued by European companies and traded on a European regulated market), the scope of the French legislative and regulatory framework could conflict with the national provisions applicable to intermediaries located in another country, which is the case with the funds as soon as they are not listed on a European regulated market and constituted in the form of an enterprise of the European Economic Area.
Another blocking point may occur when the answer is returned, if the requester refuses to honour the fees charged by the intermediary sending them.
Towards a solution to partially remove these obstacles?
In this context, Euroclear has developed a service offer deployed in 2022 that makes it possible to offer shareholder identification to a French issuer. This offer has been enriched since the end of March 2023 with the possibility for a Euroclear direct participant to benefit from adhoc invoicing to compensate for the transmission of its data to an issuer using the Euroclear offer, including funds.
However, foreign funds admitted to Euroclear France may not be covered at this stage by this mechanism in so far as they are not within the scope of the enlarged transposition made in France. In these cases, it would be appropriate to rely on other national legislative or regulatory frameworks allowing for this type of provision and/or failing that, to include them in the prospectus of the funds concerned.
In fact, spring 2023 will see an important first step regarding the identification of unitholders for French funds admitted to Euroclear France pending possible future developments.