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Corporate governance 14 Jul 2017

New technologies accelerate the digital transformation of corporate governance

The European Commission just unveiled a new directive on corporate governance, and more specifically on shareholders' rights, which will have to be transposed nationwide by June 2019. The Commission’s initiative serves a dual purpose:  It wants to promote the use of new technologies in the corporate governance of companies while increasing the commitment to transparency among institutional investors, asset managers and the companies in which they invest.

Within the context of the 'EU Corporate Governance in XXI century:  Shareholder Rights Directive II and Beyond' conference in Brussels, the European Commission and public and private representatives debated about the current state of corporate governance in Europe.  After reviewing the shareholder rights directive, they discussed both their concerns and the solutions that new digital tools offer.

Among other changes, with this directive, so-called 'proxy advisors' (independent consulting firms advising shareholders when voting for or against a company's proposals) will be required to report better about their work methods and companies will have to increase the transparency of their remuneration policies.  In addition, intermediaries will have to enable easier interaction between companies and shareholders.

The conference laid are the benefits that the use of new technologies can bring in the field of corporate governance, as it has the potential to improve interaction between the different stakeholders, both domestically and cross-border, in a safe, fast and low cost manner.  However, not all States are equally advanced in the use of technology in corporate governance-related matters. The existence of technical and legal obstacles, as well as the lack of applicable process standards and deadlines, are a barrier.

Expert Group and Public Consultation

In this context, the European Commission has decided to establish an expert group on corporate governance.  One of the functions of this group, made up of representatives of the different stakeholders (investors, issuers, intermediaries, etc.), will be to assist the Commission in specifying the minimum requirements for identifying shareholders and disclosing information along the chain of intermediaries, in addition to facilitating the exercise of shareholder rights.

The European Commission has also invited stakeholder representatives to respond to a survey, that will remain open through August 6, 2017, on how to facilitate the use of digital technologies throughout the life cycle of a society.  The opinions gathered will help the Commission in defining the scope and content of a future Corporations Act initiative.

Digital communication with the shareholder at BBVA

BBVA funnels its digital communications with shareholders and investors through its website and shareholder mailbox.  Also, for the first time, this year BBVA also made its quarterly earnings report available for shareholders in digital format. On the other hand, the bank has set up an alert service for shareholders that forwards notices as soon as new relevant information is published on the web.

Also, it publishes magazine Abaco in digital format. The publication is aimed at shareholders.  And, coinciding with the General Meeting, BBVA released a special HTML report summarizing the previous year’s highlights.