On 19 October 2021, the European Banking Authority (EBA) published draft regulatory technical standards (RTS) on disclosure of investment policy by investment firms.

Article 52 of the Investment Firms Regulation (IFR) sets out a requirement for investment firms to disclose information on investment policy, including the following information:

  • Proportion of voting rights attached to shares held.
  • voting behaviour.
  • Use of proxy advisor firms.
  • Voting guidelines.

The same article mandates the EBA to develop in consultation with the European Securities and Markets Authority (ESMA) draft RTS to specify templates for  investment policy disclosure of investment firms. This information will be published on a yearly basis, along with the financial statements.

The objective of investment policy disclosure is to publicise information about the intended influence of investment firms on companies in which they hold shares. For instance, investment firms may adopt policies that promote better governance in the companies in which they have invested or ensure that these companies are managed with a long-term perspective.

Only investment firms that do not meet the conditions for qualifying as small and non-interconnected investment firms set out in Article 12(1) IFR (class 2 investment firms) have to disclose information about their investment policy. The IFR also sets out two materiality thresholds for the application of the investment policy disclosure requirement:

It applies only to investment firms with on- and off-balance-sheet assets on average greater than EUR 100 million over the four-year period immediately preceding a given financial year.

Only companies whose shares are admitted to trading on a regulated market and in which the proportion of voting rights exceeds 5 % of all voting rights issued by the company are considered relevant for disclosure.

The requirement of investment policy disclosure is fulfilled by the use of both templates and tables. Templates contain quantitative information while tables contain qualitative information.

The RTS include two annexes:

  • Annex I contains templates and tables for the purpose of the disclosure of information on investment policy by investment firms.
  • Annex II contains detailed instructions, which provide legal references and guidance concerning specific positions for these templates and tables. Quantitative disclosures must be accompanied by qualitative explanations and any other supplementary information that may be necessary in order for the users of that information to understand them, noting in particular any significant change in any given disclosure compared to the information contained in the previous disclosures.

The final draft RTS were submitted to the European Commission for adoption.

The first disclosure date will be 31 December 2021.