On October 8, 2024, the EU Council approved the Listing Act, a package of legislative measures designed to simplify and make it more attractive for companies to access the capital markets of the European Union (EU), especially for SMEs. See Post | The EU Listing Act has been published.
One of the legislative measures included in the Listing Act is Directive 2024/2810/EU, which has to be incorporated into our domestic legal system by December 5, 2026.
Below, we summarize the key aspects of this directive:
What are Multiple Voting Shares (MVS)?
- Definition. These are shares that grant more voting rights per share than other classes of shares on matters decided at the general meeting, where the difference in voting rights between the different classes is not solely determined by the different nominal values of the shares.
- They represent a break from the principle of proportionality in public limited companies (arts. 96 and 188 LSC), which mandates proportionality between the shareholder's economic investment and their political power within the company.
By allowing the proportionality between the nominal value and the voting right of the shares to be altered, multiple voting structures are attractive to controlling shareholders of companies who want to raise financing in the capital markets while maintaining (and even strengthening) their decision-making power.
Minimum Harmonization
The directive requires Member States to recognize, at least, the right of companies applying for admission to trading on a multilateral trading facility ("MTF") to adopt multiple voting share structures, provided they meet certain requirements and safeguards. The aim is to:
- Reduce the current fragmentation in national regulations.
- Enhance the attractiveness of MTFs.
- Diversify financing options, especially for SMEs.
Requirements, Safeguards, and Transparency
The separation between share ownership and voting rights in multiple voting structures can jeopardize the interests of the company and the "external shareholders". For this reason, the Directive subjects these structures to certain requirements, safeguards, and transparency obligations.
Extension for Different Purposes
Spain may introduce regulations that allow the use of multiple voting structures for other purposes. For example, to listed companies on regulated markets or to private companies that do not intend to apply for admission to trading on a regulated market or MTF.