Proposal of amendment ZGD-1K (part two)

The main changes come in the form of provisions that enable joint stock companies to identify the holders of shares of their company, i.e. its shareholders, enabling them to effectively exercise their corporate rights vis-à-vis the company, especially in cases where shareholders are represented through intermediaries. To this end, the new Articles 235a to 235d of the ZGD-1 determine the company’s right to request information that the company is able to receive about a shareholder, the manner of ensuring personal data protection and the manner of providing information that are important for the exercise of a shareholder’s corporate rights in relation to the company, from the company to the shareholders and vice versa (can also be with the help of intermediaries). This fully fulfills the “know your shareholder” principle.

In accordance with the requirements of the Directive (EU) 2017/828, Articles 281b to 281d of the ZGD-1 introduce provisions on the transparency and approval of related party transactions. Article 281b defines the terms transaction, related party and transactions that are not considered to be related party transactions. Related parties are e.g. companies belonging to the same group of companies, further persons who are members of management or supervisory bodies, as well as their immediate family members or close family members of shareholders who are considered to be related parties. The circle of related parties is otherwise even wider. On the other hand, transactions that are not considered to be related party transactions are those in the ordinary course of business and under normal market conditions. In the case of a transaction referred to in Article 281b of ZGD-1, a public limited company must obtain the consent of the Supervisory Board before concluding the transaction if the value of the transaction exceeds 2.5 percent of the value of assets shown in the balance sheet from the last approved annual report. If the Supervisory Board rejects the consent, the Management Board may request that the General Meeting decides on this, approving the transaction by a ¾ majority of the votes cast. All concluded related party transactions must also be published on the company’s website or other appropriate information channel.

The third important requirement of Directive (EU) 2017/828 being transposed into Slovenian law by way of the amendment to ZGD-1K, refers to the mandatory formulation of the remuneration policy of administrations, supervisory boards and management boards. The essence of the provisions of Articles 294a and 294b of ZGD-1 is that public limited companies are required to formulate a remuneration policy for all members of management and supervisory bodies as well as executive directors – until now the determination of remuneration policy was voluntary. The remuneration policy must be clear, comprehensible and contain a description of all components, fixed and variable, including all allowances and benefits in any form. The remuneration policy is adopted by the General Meeting. If the resolution is not adopted at the General Meeting, the remuneration policy shall remain valid, but a new, amended remuneration policy must be put to the vote at the next General Meeting. Each year, the company is required to issue a remuneration report, which is a special document prepared by the management and supervisory body, reviewed by the auditor and subject to a consultative vote at the company’s General Meeting. The remuneration policy and remuneration reports must be published on the company’s website. The provisions apply only to public limited companies, but non-public limited companies may include these rules by explicitly stating so in the statute.