multiple voting shares - corp

one share one vote principle

each share gives one voting right; standard corporate governance rule

multiple voting shares (MVS)

shares giving more than one vote per share

corporate control

ability to influence company decisions

control enhancing mechanisms (CEMs)

tools that increase voting power relative to ownership (MVS

hostile takeover

acquisition attempt against management’s control

dual class shares

share structure with different voting rights classes (high-vote insiders

purpose of MVS

allow founders to retain control even with minority ownership

benefit of CEMs long term

protect long-term strategy from short-term market pressure

criticism of CEMs

risk of entrenchment and weaker minority shareholder protection

pre-2014 Italy corporate law

strict one share one vote system with limited exceptions

Article 2351 Italian Civil Code (old)

prohibited multiple voting shares in listed companies

allowed share types pre-2014

non-voting shares

dual class structure Italy pre-2014

allowed different voting rights classes but under strict limits

Dutch corporate governance

more flexible system allowing loyalty shares under reasonableness and fairness principles

reasonableness and fairness principle (Netherlands)

limits abuse of governance structures instead of strict statutory bans

loyalty shares (LS)

extra voting rights granted after long-term continuous shareholding

IPO (Initial Public Offering)

first public sale of shares when company becomes listed

forum shopping

corporate migration to jurisdictions with more favourable governance rules

corporate migration motive

driven mainly by governance flexibility and CEMs rather than tax

2014 Italian reform

introduced MVS and loyalty shares shifting away from strict one share one vote

Article 127-quinquies CLF

legal basis for loyalty shares in Italy

Article 127-sexies CLF

limits issuance of MVS in listed companies

MVS Italy post-2014

up to 3 votes per share mainly for pre-IPO and closed companies

loyalty shares mechanism

2 votes after 24 months then +1 vote per year up to 10 votes

loyalty shares requirement

registration in special shareholder list and continuous holding

loss of loyalty shares benefit

lost upon transfer of shares

loyalty shares exceptions

retained in succession

2024 Italian reform

increased voting multipliers up to 10 votes per share for MVS and LS

policy goal Italy reforms

attract listings

listed vs pre-IPO MVS

MVS mainly used pre-IPO; loyalty shares mainly post-IPO

MVS after IPO

existing MVS can remain but new issuance restricted

neutralisation of MVS

loss or reduction of voting advantage in major corporate events

qualified majority

voting threshold higher than simple majority to protect minority shareholders

MVS effect

control concentration with low capital ownership

loyalty shares effect

gradual increase in control based on time

EU Capital Markets Union (CMU)

EU project to improve capital markets access and IPO attractiveness

regulated market (RM)

traditional stock exchange with stricter listing rules

multilateral trading facility (MTF)

lighter trading venue like SME growth markets

EU MVS approach

permits MVS mainly on MTFs with safeguards

minimum harmonisation

EU sets baseline rules but allows national variation

fragmentation risk

different national systems create inconsistent rules across EU

sunset clause

limits duration of enhanced voting rights (time

separate class vote

affected shareholders vote separately on MVS introduction

“Christmas tree” regulation

many layered safeguards making system complex and fragmented

stepping stone approach

EU framework seen as transitional