Among the most important governance standards are rights to
vote for who is on the board of directors for investors of labour and capital.
Shareholder rights The
Shareholder Rights Directive 2007 requires
shareholders be able to make proposals, ask questions at meetings, vote by proxy and vote through intermediaries. This has become increasingly important as most company shares are held by
institutional investors (primarily
asset managers or banks, depending on the member state) who are holding "other people's money". A large proportion of this money comes from employees and other people saving for retirement, but who do not have an effective voice. Unlike Switzerland after a
2013 people's initiative, or the U.S.
Dodd-Frank Act 2010 in relation to brokers, the EU has not yet prevented intermediaries casting votes without express instructions of beneficiaries. • Draft Ninth Company Law Directive, on
corporate groups Employee rights A
Draft Fifth Company Law Directive proposed in 1972, which would have required EU-wide rights for employees to vote for boards stalled mainly because it attempted to require
two-tier board structures, although most EU member states have
codetermination today with unified boards.
Investor rights A series of rights for ultimate investors exist in the
Institutions for Occupational Retirement Provision Directive 2003. This requires duties of disclosure in how a retirement fund is run, funding and insurance to guard against insolvency, but not yet that voting rights are only cast on the instructions of investors. By contrast, the
Undertakings for Collective Investment in Transferable Securities Directive 2009 does suggest that investors in a
mutual fund or ("
collective investment scheme") should control the voting rights. The
UCITS Directive 2009 is primarily concerned with creating a "passport". If a firm complies with rules on authorisation, and governance of the management and investment companies in an overall fund structure, it can sell its shares in a collective investment scheme across the EU. This forms a broader package of Directives on securities and financial market regulation, much of which has been shaped by experience in the
2008 financial crisis. Additional rules on remuneration practices, separating depositary bodies in firms from management and investment companies, and more penalties for violations were inserted in 2014. These measures are meant to decrease the risk to investors that an investment goes insolvent. The
Markets in Financial Instruments Directive 2004 applies to other businesses selling
financial instruments. It requires similar authorisation procedures to have a "passport" to sell in any EU country, and transparency of financial contracts through duties to disclose material information about products being sold, including disclosure of potential
conflicts of interest with clients. The
Alternative Investment Fund Managers Directive 2011 applies to firms with massive quantities of capital, over €100 million, essentially
hedge funds and
private equity firms. Similarly, it requires authorisation to sell products EU wide, and then basic transparency requirements on products being sold, requirements in remuneration policies for fund managers that are perceived to reduce "risk" or make pay "performance" related. They do not, however, require limits to pay. There are general prohibitions on
conflicts of interest, and specialised prohibitions on
asset stripping. The
Solvency II Directive 2009 is directed particularly at insurance firms, requiring minimum capital and best practices in valuation of assets, again to avoid insolvency. The
Capital Requirements Directives contain analogous rules, with a similar goals, for banks. To administer the new rules, the
European System of Financial Supervision was established in 2011, and consists of three main branches: the
European Securities and Markets Authority in Paris, the
European Banking Authority in London and the
European Insurance and Occupational Pensions Authority in Frankfurt. ==Corporate finance==