The Recovery Decree allows Italian companies with equity listed on regulated markets to issue multiple voting shares to enhance competition with foreign countries and protect the Italian markets.

By Antonio Coletti, Isabella Porchia, and Guido Bartolomei

The Recovery Decree dated May 13, 2020, introduced the ability for Italian listed companies to issue multiple voting shares to enhance competition with foreign jurisdictions, discourage the transfer of the corporate seat to and listing in countries permitting such voting structures, and protect the Italian markets.

This measure follows and accompanies the measures of the Liquidity Decree, which strengthened the government’s golden power rules and the reporting requirements of relevant shareholdings in Italian listed issuers (for details, see Italy Adopts Liquidity Decree to Support Italian Companies).

Until the adoption of the Recovery Decree, Italian listed companies were only entitled to issue ordinary shares with increased voting rights (azioni a voto maggiorato) of up to two votes, accruing after at least 24 months of uninterrupted ownership starting from the enrolment in a special register (article 127-quinquies of Legislative Decree no. 58 of 24 February 1998, as amended, the Decree 58).

In accordance with the new rules, listed companies will be entitled to amend their bylaws to provide for multiple voting shares (azioni a voto plurimo) of up to three votes, which can be limited to certain matters or be conditional upon the occurrence of conditions that are not discretionary (new article 127-sexies of Decree 58 and article 2351, paragraph 4, of the Italian Civil Code) (article 45 of the Recovery Decree in the draft, available pending publication in the Official Gazette). Introduction in the bylaws of multiple voting shares are subject to the approval of the extraordinary shareholders meeting of the company, and to the following:

  • Whitewash Approval: no contrary votes by the majority of shareholders attending the meeting, which should represent at least 10% of the voting capital, and which must be unrelated to the shareholder(s) owning the majority stake;
  • Withdrawal Right: any dissenting or absent shareholder has a right of exit through the exercise of withdrawal rights; and
  • Additional Approval: the approval by special meetings of holders of special categories of shares or other equity financial instruments with administrative rights, if any, is required.

The explanatory report clarifies that these provisions are aimed at protecting minority shareholders and the dynamics of the market.

In line with the rationale of the measure, the Recovery Decree expressly provides that the provisions above shall equally apply to any shareholders’ resolution approving a transaction that results in the transfer of the registered seat abroad, including through a merger or a de-merger, and in the introduction of multiple voting rights according to the laws of the foreign jurisdiction where the registered seat would be moved.

Latham & Watkins will continue to monitor and report on developments in this area.