The recent Law Decree “Decreto Competitività” 2014 (Law Decree n.91, 24 June 2014, converted – with amendments – into Law n. 116, 11 August 2014 and published in the Official Journal – Gazzetta Ufficiale – n. 192 on the 20th of August 2014, Ordinary Supplement n. 72), has introduced important modifications to both the Italian Civil Code (Codice Civile, c.c.) and the Legislative Decree n. 58, 24 February 1998 (i.e. TUF), on the theme of voting power in stock limited companies.
With regard to non-public companies, the 4th paragraph of Article 2351 of the Italian Civil Code is entirely substituted by introducing the faculty – through modification of the by-laws – to issue shares with multiple voting power, with a maximum of three votes for each share and also in case of “special arguments or subordinated to the verification of some non-merely potestative conditions”. This shareholders resolution shall be adopted (for the limited companies registered in the Registry within the 31 of August 2014), also at first call, with positive vote of at least three thirds of the share capital present at the meeting.
For public companies, the new Article 127 quinquies TUF, named “increase of vote”, introduces the loyalty shares, which attributes a multiple voting power to the shareholders who owned shares for a certain time, while Article 127 sexies, named “Shares with multiple voting power”, excludes for public companies – in accordance to Article 2351, 4th paragraph, Italian Civil Code – the possibility to issue shares with multiple voting power, but at the same time Article 127 sexies admits multiple voting power shares already in circulation before the recourse to the stock exchange market. Finally, Article 127 sexies admits also to issue – in specific cases – new multiple voting power shares with the same characteristics of the ones already in circulation: this possibility could may be derogated by the by-laws.
With regard to multiple voting shares, in accordance to Article 127 quinquies, the by-laws of public companies or companies becoming public “can allow a multiple voting power – up to a maximum of two votes – for each share owned by the same shareholder, continuingly and for at least 24 month from the date of registry “in the Registry of the shareholders with multiple voting power” (first paragraph). Those by-laws shall also “determine how to attribute this multiple voting power and who is entitled to obtain it “. In other words, the multiple voting power is a sort of “fidelity award” for “long term” shareholders.
The multiple voting shares are not to be considered a special share type as the ones defined by Article 2348 of the Italian Civil Code (5th paragraph).
If the by-laws do not dispose differently, the multiple voting shares shall be considered for the assembly constitutional and deliberative quorum, who refers to capital amounts.
The multiple voting system do not has any impact on other rights than voting rights, although those are rights depending on capital amounts too. It has no impact on, for example, the assembly call, on the responsibility action towards administration and control organs or on the assembly resolution appeal.
The possibility to issue multiple voting shares shall have the goal to incentive the quotation of companies, but, at the same time, it shall permit to the holding company to maintain its reference position.
Furthermore, the assembly resolution that introduces this new multiple voting shares do not permit the termination for those who voted against (6th paragraph).
For the complete approval of this new regulation on multiple voting shares a Consob regulation is necessary and it should be adopted within the 31 of December 2014, in order to define the implementation rules too and to grant the transparency of the ownership structures as well as the communication obligation that share-holders who have majority interest have.
With regard to public companies, it is provided that the issue of multiple voting shares shall be permitted only if this has the same characteristics of those already in circulation, in order to maintain the previous equity among the different shares categories. The issue of multiple voting shares shall be limited to the cases of free share capital increase or in case of increase without limitation of the option, fusion or separation right (Article 127, second paragraph, letter a) and b) and only if the by-laws do not states differently.
The multiple voting shares, differently to the increased voting shares, are a particular share category to which is applied a particular regulation and, in particular, with the consequence that the multiple vote is transferred to every eventual cessionary.
Finally, it has also been modified paragraph 3 of Article 2351 of the Italian Civil Code, providing for all limited companies – and therefore also for the public companies – the possibility to introduce in their by-laws – with regard to the shares owned by the same shareholder – that the voting right shall be limited to a maximum quantity or that it shall be staggered (for example, 1 vote for each share until the 4% of the social capital, 1 vote every two shares for more than the 4% and until the 8% and so on).