New law on multiple-vote share structure part of EU listing rules reform package

On 14 November 2024 the EU Listing Act package was published in the Official Journal of the European Union. It came into force on 4 December.

The package contains the new Prospectus and Markets Regulation and two new directives: the Directive on Multiple-Vote Share Structures and the Markets Directive. Some of the changes under the EU Listing Act came into effect from the first week of December 2024, while other changes will enter into force in March and June 2026.

The MVSS directive provides for the introduction of MVSS, a share structure for companies seeking to trade their shares in certain financial markets and other multilateral trading facilities. EU member states have a period of two years to implement the new rules into their national legislation.

“Historically, SMEs have been reluctant to list, fearing a loss of control over their business,” said Dublin-based corporate law expert Gerry Beausang of Pinsent Masons.

MVSS are a type of share classification that allows certain shares to carry more voting rights than others. This means that shareholders holding these shares have a greater influence over corporate decisions compared to those holding ordinary shares. “Therefore, MVSS serve as an effective tool, enabling SME owners to retain decision-making power while accessing public market funds,” Beausang said.

MVSS typically include at least two distinct and separate classes of shares with different number of voting rights attached to the shares belonging to each class. Some member states have allowed MVSS since almost the beginning of their capital markets regimes. In contrast, other member states have banned them.  

The directive will introduce safeguards on how key decisions are taken at general meetings - either by setting a limit on the voting power existing shareholders can have compared to new shareholders, or by restricting certain decisions that the general meeting can make to require a higher majority vote. The directive requires companies with MVSS that list their shares to follow transparency measures. This helps investors make informed decisions by ensuring updated annual financial statements are disclosed. The European Securities and Markets Authority (ESMA) will create guidelines on how to properly label multiple-vote shares.

“ESMA is anticipated to release various consultation papers and final reports tailored to each legislative area, facilitating the Act's implementation and identifying necessary changes to achieve its objectives,” Beausang said.

Before the adoption of the MVSS directive, some EU member states had banned the structure due to the risk of shareholder inequality and to ensure minority shareholder protection, corporate governance and market confidence. At the same time, other member states such as Finland and Denmark had allowed their use since the inception of capital markets.

Beausang said: “The fragmented approach has created unequal opportunities for EU companies looking to list. The new directive aims to level the playing field by harmonising national laws on MVSS for companies on SME growth markets, while allowing member states flexibility to tailor implementation specifics.”