On 31 March 2021, the European Banking Authority (EBA) issued a consultation paper on draft regulatory technical standards (RTS) on disclosure of investment firm policy by investment firms.

The legal basis for the consultation paper is Article 52 of the Investment Firms Regulation (IFR) that sets out the requirement for investment firms to disclose information on investment policy, including the following information: (i) proportion of voting rights attached to shares held; (ii) voting behaviour; (iii) use of proxy advisor firms; and (iv) voting guidelines. The same Article mandates the EBA to develop in consultation with the European Securities and Markets Authority 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.

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. Moreover, the IFR specifies two materiality thresholds for the application of the investment policy disclosure requirement. First, 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. Second, 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 draft RTS in the consultation paper:

  • Put forward templates and tables for the disclosure of information on the investment firm’s voting behaviour, explanation of the votes, and the ratio of approved proposal, with the objective to show if the investment firm is an active shareholder that generally uses its voting rights, and how it uses them.
  • Include information on the use of proxy advisory firms that should help address uncertainties about potential conflicts of interest.
  • Include information on investment firms’ voting guidelines, including, when relevant, a breakdown by geographical zone, economic sector or topic of the resolution being voted.

The RTS includes 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.

The deadline for comments on the consultation paper is 1 July 2021. A public hearing will be organised in the form of a webinar on 6 May 2021.