Definition and Function of Multiple Voting Rights
The Italian legislature enacted new measures to streamline corporate governance dynamics, introducing - among other things - multiple voting rights to allow certain categories of quota holders to exercise more votes per quota held. On this regard, Law No. 21 of March 5th, 2024, expands the use of this practice, which previously existed in a limited form, to strengthen the control of founding or strategic quota holders while safeguarding investors’ interests.
By focusing on simplifying corporate ownership structures and expanding investor rights, the legislation delivers the main benefit of reducing bureaucratic hurdles. This reform will strengthen Italy’s international competitiveness by providing a more efficient and foreseeable regulatory environment, making the country increasingly attractive to foreign investors.
Reasons for Introducing Multiple Voting Rights
The law recognizes that multiple voting rights can be an effective tool for:
- Promoting Corporate Stability: Ensuring that founding quota holders maintain strategic control even when the company opens its capital to new investors;
- Attracting Capital: Investors are encouraged to participate, knowing that long-term visionaries retain decision-making control; and
- Supporting Business Growth: Companies can access financial resources without compromising governance stability.
Implementation Framework
Under Law No. 21/2024, multiple voting rights can be introduced through bylaw amendments approved by the quota holders’ meeting. Key regulatory aspects include:
- Applicability Limits: Multiple voting rights apply under specific conditions, such as for unlisted companies or those in growth phases;
- Duration and Revocability: Provisions for multiple voting rights may be time-limited and revocable in case of significant structural changes; and
- Proportionality: The law sets a maximum limit on additional votes per quota, ensuring a balance between control and representation.
