New rules on multiple voting shares must strike the right balance between issuer and investor needs

EFAMA published a Position Paper on the EC’s Multiple Voting Shares Directive (eventid=18761), acknowledging EC’s efforts to enhance the CMU and bolster public capital markets‘ competitiveness. However, EFAMA raises concerns and emphasizes the need for a balanced approach in regulating multiple voting share structures.
EFAMA underscores the importance of maintaining a balance between the interests of issuers and investors. While acknowledging the significance of these rules in fostering a competitive source of finance for SMEs, EFAMA stresses the necessity for clear and harmonized safeguards to govern their use.
Specifically, EFAMA supports the EC’s proposal for appropriate limits on voting rights ratios, favoring a maximum weighted voting rights ratio of 5:1. They also endorse the inclusion of expiration (sunset) clauses for voting rights, lasting either five or seven years, to prevent the indefinite accumulation of voting power.
Furthermore, EFAMA advocates for restrictions on the use of supplementary voting rights during general meetings to prevent manipulation or misuse. They also emphasize the importance of mandatory shareholder approval for transactions that could pose conflicts of interest or fairness concerns. Lastly, EFAMA supports the prohibition of transferring enhanced voting rights to third parties, reverting them to the standard ‚one-share, one-vote‘ model upon transfer.