Changes from report parliamentary committee draft to plenary report

Added(8) Member States should be able to introduce, or maintain in force, national provisions that allow companies to adopt these structures for purposes other than the first time admission to trading of shares on a regulated market, an SME growth market or any other MTF. This may also include cases whereby companies transfer from an SME growth market to a regulated market, while retaining multiple-vote shares.

RemovedArticle 5 – paragraph 1 – point b – point ii: deleted

Added(9) ▌Member States should not prevent companies from adopting multiple-vote share structures at a point prior to the moment of the admission of shares to trading. Member States should, however, be allowed to lay down that the exercise of the enhanced voting rights, which represent additional voting rights attached to multiple-vote shares compared to voting rights of shares of other classes, is conditional upon the admission to trading of shares on a regulated market, an SME growth market, or any other MTF, in one or more Member States. In that case and until the admission to trading, multiple-vote shares should have the same voting rights as other classes of shares in the company. That would ensure that multiple vote shares specifically promote a first-time admission to trading on a regulated market, an SME growth market or any other MTF.

RemovedArticle 5 – paragraph 1 – point b a (new): (ba) limit the impact of multiple-vote shares on the decision-making process at general meetings of shareholders by introducing the following: / (i) a maximum ratio of the voting rights attached to multiple-vote shares to the voting rights attached to shares with the least voting rights; / (ii) a requirement that decisions by general meetings of shareholders that are subject to qualified majority voting, excluding appointment and dismissal of directors as well as operational decisions to be taken by directors and submitted to the general meeting of shareholders for approval, are to be adopted by: / – a qualified majority, as specified in national law, both of the votes cast and either of the share capital represented at the meeting or of the number of shares represented at the meeting; or / – a qualified majority, as specified in national law, of the votes cast, and are subject to a separate vote within each class of shares the rights of which are affected; / (iii) a requirement to ensure that the enhanced voting rights cannot be used to block the adoption of decisions that aim to prevent, reduce or eliminate adverse impacts related to the operations of the company concerned on human rights or the environment.

Added(10) Due to a diminished voting power of non-controlling shareholders in the company relative to their investments, multiple-vote share structures may provide controlling shareholders of that company with perpetual control and thereby lead to controlling shareholder entrenchment. That may increase the risk that controlling shareholders extract private benefits from control. To address those risks, the adoption of multiple-vote share structures should be subject to safeguards to protect minority shareholders.

RemovedArticle 5 – paragraph 2 – introductory part: 2. Member states may provide for further safeguards to ensure adequate protection of the interest of shareholders who do not hold multiple-vote shares.

Added(11) Member States that allow multiple-vote shares provide for safeguards to protect minority shareholders and the interests of the company. However, the existing safeguards vary between Member States due to national specificities and diverging company law systems. Having regard to the objectives of the internal market as set out in particular in Article 50(2), point (g) of the Treaty on the functioning of the European Union, Member States should ensure a coordinated approach in their national laws on multiple-vote share structures with respect to the protection of the interests of minority shareholders and of the company. This includes protection against decisions creating risks for or resulting in adverse human rights, climate change, and environmental consequences. Under that coordinated approach, all Member States should ensure that any decision to adopt a multiple-vote share structure, or to modify that structure where there is an impact on voting rights, is taken by a qualified majority at the general shareholders’ meeting. In companies where there are several classes of shares, that qualified majority should be calculated on the basis of the total number of votes cast and on the basis of the number of votes within each class of shares affected by the decision. Furthermore, Member States should limit the voting weight of multiple-vote shares by introducing restrictions▌ on the design of the multiple-vote share structure and on the exercise of voting rights attached to multiple-vote shares for the adoption of certain decisions. The restriction on the exercise of voting rights may be implemented by requiring that an approval by qualified majority necessitates both a qualified majority of the votes cast at the general meeting of shareholders and of the share capital represented at the general meeting of shareholders.

RemovedArticle 5 – paragraph 2 – point a: deleted

Added(11a) Multiple-vote shares may protect a company from focussing too much on short-term interests, by giving a stronger voice to founders and long-term shareholders. With a view to stimulating long-term sustainable growth, companies issuing multiple-vote shares could publish a report detailing how their share structure will help to promote the interests of all stakeholders.

RemovedArticle 5 – paragraph 2 – point b: deleted

Added(12) Member States should be given discretion to introduce additional safeguards, where needed, to ensure adequate protection of minority shareholders’ interests and the interest of the company. Member States should assess the appropriateness of additional safeguards in light of their effectiveness in protecting the interests of minority shareholders and of the company, while ensuring that such safeguards do not defeat the purpose of multiple-vote share structures, i.e. the possibility for a company’s controlling shareholders to influence important decisions, including the appointment of directors.

RemovedArticle 5 – paragraph 2 – point c: deleted

Added(13) The disclosure of accurate, comprehensive and timely information about issuers strengthens investor confidence and allows for informed investment decision-making. Such informed investment decision-making enhances both investor protection and market efficiency. Member States should therefore require companies with multiple-vote share structures to have a stock name that ends with the marker ‘WVR’ (weighted voting rights) in order to clearly indicate to the public that their shareholder structure and liquidity profile is different from that of traditional companies. Member States should also require companies with multiple-vote share structures to publish detailed information on their share structure and corporate governance system at the moment of the admission to trading, as well as periodically in the annual financial report. Such information should mention whether there are any limitations on the holding of securities, including whether any transfer of securities requires the approval either of the company, or of other holders of securities. It should also mention whether there are any restrictions on voting rights, including limitations of the voting rights of holders of a given percentage or number of votes, deadlines for exercising voting rights, or systems whereby the financial rights attached to securities are separated from the holding of securities. Such information should be updated periodically and whenever a significant change occurs in the ownership or control of shares with special voting rights. Furthermore, those companies should in accordance with existing transparency law, disclose the identity of holders of multiple-vote shares as well as of the natural persons entitled to exercise voting rights on their behalf and of persons exercising special control rights to provide investors, as members of general public, with transparency on ultimate ownership and de facto influence on the company. This would allow investors to make informed decisions and thereby strengthen their confidence in well-functioning capital markets.

RemovedArticle 5 – paragraph 2 – point d: deleted

Added(14) Since the objectives of this Directive, namely to increase funding options for businesses as well as to make SME growth markets more attractive, cannot be sufficiently and timely achieved by Member States but can rather, by reason of the scale and effects of the measures, be more effectively and expeditiously achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on the European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.

RemovedArticle 6 – paragraph 1 – introductory part: 1. Member States shall ensure that companies with multiple-vote share structures whose shares are traded or are to be traded on a regulated market or an SME growth market make publicly available, respectively, in the prospectus referred to in Article 6 of Regulation (EU) 2017/1129 of the European Parliament and of the Council43 [or in the EU Growth issuance document referred to in Article 15a of that Regulation] or in the admission document referred to in Article 33(3), point (c), of Directive (EU) 2014/65/EU and in the company’s annual financial report referred to in Article 78(2), point (g), of Commission Delegated Regulation (EU) 2017/56544 , detailed information on all of the following:

Added(15) To assess the implementation and impact of this Directive, in particular any negative impact on stakeholders, and to take account of market developments and developments in other areas of Union law or Member States’ experiences with the implementation of this Directive, the Commission should review this Directive three years following the date of transposition and every three years thereafter.

RemovedArticle 6 – paragraph 1 – point a: (a) the structure of their capital, including securities which are not admitted to trading on a regulated market or an SME growth market in a Member State, with an indication of the different classes of shares and, for each class of shares, the rights and obligations attached to that class and the percentage of total share capital and total voting rights that such class represents;

Added(16) In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents, Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the legislator considers the transmission of such documents to be justified.

RemovedArticle 6 – paragraph 2 a (new): 2a. Companies with multiple-vote share structures the shares of which are traded or are to be traded on a regulated market or an SME growth market shall have a stock name that ends with the marker 'WVR' (Weighted Voting Rights) in order to clearly notify the public that their shareholder structure is different from traditional stocks. National competent authorities and SME growth markets shall promote investor understanding and awareness concerning the WVR-marker and the impact on voting rights associated with investing into companies with multiple vote-share structures.

Added(17) The European Data Protection Supervisor was consulted in accordance with Article 42(1) of Regulation (EU) 2018/1725 of the European Parliament and of the Council and delivered an opinion on [XX XX 2022/2023],

RemovedArticle 7 – paragraph 1 – introductory part: By [three years after the entry into force of this Directive], the Commission shall submit a report to the European Parliament and the Council on the implementation and effects of this Directive. To that effect by [two years after the entry into force of this Directive], Member States shall provide the Commission with information in particular on the following:

AddedHAVE ADOPTED THIS DIRECTIVE:

RemovedArticle 8 – paragraph 1: 1. Member States shall bring into force the law, regulations and administrative provisions necessary to comply with this Directive by … [one year after the date of entry into force of this Directive]. They shall immediately inform the Commission thereof. When Member States adopt those measures, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States.

AddedSubject Matter