Italy to boost multiple-vote shares to support Milan bourse, sources say

FILE PHOTO: A woman walks past the Italian Stock Exchange in Milan, Italy, February 25, 2020. REUTERS/Flavio Lo Scalzo/File Photo

By Giuseppe Fonte

ROME (Reuters) – Italy plans to enhance voting rights to persuade entrepreneurs to float their businesses in Milan without worrying about losing control to other investors, sources briefed on the matter said.

The scheme is part of a broader package of measures aimed at strengthening the ability of the Milan Stock Exchange to compete with European peers after the loss of some prominent companies over the past year.

Economy Minister Giancarlo Giorgetti said this week Rome would unveil “within days” a legislative proposal to reinforce the country’s capital markets.

The Treasury’s scheme would allow companies planning to list to issue special shares that give existing investors a right to cast up to 10 votes at shareholder meetings for each share owned, surpassing the current limit of three votes.

Italian companies are often family-run and their founders are unwilling to share control with other investors by listing, unless they have a pressing need of cash for M&A or other expansion strategies.

Rome studied solutions to extend differentiated voting rights in the Treasury’s Green Paper on capital markets published a year ago, but the reform process was frozen due to the election in September that saw nationalist Giorgia Meloni come to power as prime minister.

The Treasury’s latest package also includes measures to simplify the listing process and make it less costly and cumbersome to provide adequate risk disclosure for investors.


Current Italian rules prohibit listed companies from issuing multiple-vote shares, except in the form of a so-called “loyalty share scheme”, that confers double voting rights to long-standing shareholders of at least 24 months.

Non-listed firms can issue shares that give existing investors a right to cast three votes per share and preserve them after the initial public offer (IPO).

Institutional investors usually advocate the “one share, one vote” principle to grant an equal treatment to all shareholders.

Rome believes that strengthening the ability to issue multiple-vote shares prior to listing is a good compromise, because any investors in a company would know in advance they would be sharing ownership with more powerful shareholders.

Its scheme is in line with a directive proposal laid out in December by the European Commission to regulate multiple-vote shares as a way to make capital markets more attractive for small and medium-sized companies (SMEs).

EU’s member states offer a mixed framework on such a topic. The percentage of listed companies with multiple-vote shares represent the majority of listed companies in terms of market capitalisation in Finland and Denmark, while Germany and Belgium have banned these share structures for public companies.


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