Many investors commonly use the strategy of investing in dividend stocks. Yet, investors holding foreign shares often have to pay additional withholding tax on dividends in the respective country. A recent survey conducted by BETTER FINANCE and DSW among 3,000 investors across the EU found that withholding tax (WHT) refund procedures are cumbersome and costly, making it difficult or financially unreasonable for non-professional investors to reclaim excess withholding tax on cross-border dividend income.

The 2021 general meeting season was the first one completed under the full application of the new European rules that are supposed to pave the way towards greater ‘shareholder engagement’, SRII. That same year, BETTER FINANCE, together with DSW, and its other member organisations, undertook a first research project to determine whether intermediaries are ‘SRD II-ready’ and, more specifically, to what extent shareholders would really be able to fully exercise their rights by attending and/or voting at AGMs when  they held stocks of companies domiciled in a different EU Member State than that of their bank or broker. To this end, an EU-wide mystery shopping exercise was carried out to obtain a representative sample of respondents and identify, in practice, what real obstacles these European retail investors/shareholders face when trying to enforce their voting rights. In 2022 we renewed and pushed our analysis further, notably by including an exclusive case study focused on neobrokers’ services related to shareholders’ voting rights. Here are the findings.

Despite the great importance the EU places on Governance (the G part of “ESG”) and, in particular, on shareholder engagement, to date the exercise of shareholder voting rights is still facing substantial obstacles. With the second Shareholder Rights Directive and its Implementing Regulation in force since September 2020, EU legislators aimed at removing certain obstacles for shareholders.

DSW, together with BETTER FINANCE and its member organisations launched a research project to identify whether or not intermediaries are SRD II-ready and, more specifically, to find out if shareholders would be able to fully exercise their rights by participating in, and voting at, general meetings, especially when they hold stocks of companies domiciled in another Member State.

The results of the research project are devastating. In the vast majority of cases, shareholders were not able to fully or partially exercise their fundamental rights at general meetings abroad. In addition, there were numerous instances of high costs being charged to them, in some cases up to 250 EUR per general meeting.

The Covid-19 pandemic has had a significant impact on the general meeting season 2020 throughout Europe and led to an unprecedented rise in virtual meetings across the EU. This report provides an overview of the status of shareholders' rights connected to general meetings of listed companies prior to the pandemic. It further analyses measures that have been taken in selected European Member States in response to the pandemic and how these measures have been perceived by shareholders and their representative organisations. Finally, the report ends with lessons learned and identifies best practices for post-pandemic general meetings.