From Voting Policy to Shareholders Engagement Policy (Summary of AFG’s note from the 10/01/2020)


I. Succint reminder of Voting Policy obligations for Porfolio management companies (former regulation)

The regulation document called « Voting Policy » has to highlight decision criteria chosen by the management company according to its size, activities nature, managed UCITS/AIF categories, stake extent in issuing companies capital, administrative constraints, even cost for exercising voting rights in some countries.

The managing company must justify at any moment chosen positions. Each year, the company must explain in the specific report intended to investors and the AMF (Financial Markets Authority), its decisions regarding vote or abstention in resolutions discussed in general meetings. If the company does not use its voting rights it must justify this decision.

The “Voting Policy” document and company report summarise in which conditions its used managed UCITS and AIF voting rights, and related vote information for any decisions can be read on the company website or at its headquarters if it has no available website. These documents should be given freely to any UCITS or AIF shareholders asking for them.

Report must be mentioning “the number of companies in which the Portfolio Management Company used its voting rights comparing to the whole companies it had voting rights.” (article 319-22 and 321-133 of the General Regulation of the AMF).

II. The new regulationh: Shareholders engagement Policy

Since 28th November of 2019, France transposed the directive called “Shareholders rights” in the national law (decree 2019-1235 published in the official journal). It came into effect to all State Members in June 2019. This decree completes regulatory measures of the COMOFI (Monetary and Financial Code) and the Insurance Code.

AMF General Regulation articles used to regulate Voting Policy have been deleted.

Two systems have been added:

  • Shareholders Engagement (including the voting policy)
  • Investment Policy transparency

A. Sharholders engagement Policy

Engagement Policy contains six elements (including the Voting Policy that was mandatory by the former regulation) that must appear in the “Shareholders Engagement Policy” procedure:

  • Monitoring the strategy, financial and non-financial performances, risks, capital structure, social, environmental and governance impact of the company.
  • Discussions with companies invested in
  • Voting rights exercise and other rights attached to shares (limited to hold shares by mandates and funds)
  • Cooperation with the other shareholders
  • Communication with relevant stakeholders
  • Prevention and management of real and potential conflicts of interests compared to their commitment.

Shareholders Engagement Policy choice should be contractualise between institutional investors (insurance companies) and the management company.

B. Investment strategy transparency

Portfolio Management Companies are only involved when they manage institutional investors’ commitments, so they can comply their own obligations. This knock-on effect appears in the COMOFI (article L533-22). Concerned products are:

  • Mandates
  • “Collective investments” (every fund in which institutional investors invested and not only dedicated funds)

Institutional investors and Portfolio Management Companies must agree in a contract about equity management in a long-term objective complying with “long-term” objective of insurers liabilities.

Portfolio Management Companies must communicate every year to the institutional investor about how they complied with long-term investment objectives that it has been assigned. The report must contain the following:

  • Most important mid and long-term risks related to investments within the scope of the contract
  • Managed portfolio within the framework of the contract, composition, turnover and turnover cost
  • Portfolio Management Company regular practices regarding securities loans, and, if relevant, how they applied as part of the Shareholders Engagement Policy during invested companies’ general meetings
  • An assessment of mid and long-term performances of companies held within the scope of the contract including non-financial performances and if relevant assessment methodology
  • Conflicts of interest occurrence while Shareholders Engagement policy implementation, and if relevant how they are managed.

It is possible to apply “Comply of explain” principle as mentioned in article L533-22: “One or several of these pieces of information may not appear in the Engagement Policy if the reasons why they are not in are explained.”.

III. What you had to implement as soon as possible (in theory before the 28th of February 2020)

A. Field of application

The Shareholders Engagement Policy concerns:

  • Equities investments made by UCITS
  • AIF under AIFM directive, the Voting Policy concerns only equities investments made by UCITS, mainstream Private Equities funds (FCPR, FIP, FCPI), FFA, FPS, FPCI, FPVG and Employee Savings Scheme Funds.

à Real Estate/Property funds and SICAF have been excluded

B. Write a Shareholders Engagement Policy

The writing of a Shareholders Engagement Policy is based on the six elements mentioned in the above II.A but the application field is to be defined by the Portfolio Management Company by using “Comply or explain” principles.

C. Circulate the shareholders Engagement policy

The Engagement Policy should be available on the Portfolio Management Company website. Motives about some criteria exclusion must appear.

Observation: there is no obligation for a regular review of the Engagement Policy. This being considered, it needs to be updated as necessary.

D. Write reports on Shareholders Engagement Policy

Portfolio Management Companies must report every year about Shareholders Engagement Policy execution. It must be freely available on the company website. Reports relate essentially to the “Voting Policy” element:

  • A general description about how voting right were used
  • An explanation about choices made on most important votes
  • Information about potential recourse to voting advisors
  • Votes positioning expressed during general meetings. This information may exclude insignificant votes due to their object or the stake size in the company


Following AFG (French Financing Management Union) letter addressed to the AMF, it has been decided that year 2020 is a transition period and that Portfolio Management Companies may, at least, publish the former version.