FantasticSearch

(1) To reinforce the attractiveness of listing on trading venues primarily targeted by small and medium-sized enterprises (SMEs), such as SME growth markets and other multilateral trading facilities (MTFs), thereby increasing their ability to raise funds on MTFs, and to reduce inequalities for companies seeking admission to trading in the internal market, it is necessary to address the obstacles to access to MTFs that stem from regulatory barriers.

(2) Fear of losing control of the company constitutes an important deterrent for controlling shareholders to access a public market, such as an MTF. Admission to trading usually entails dilution of ownership for controlling shareholders, thus reducing their influence over important investment and operating decisions. Maintaining control of the company can be of particular importance for controlling shareholders of start-ups and companies with long-term projects that require significant upfront costs, because they might wish to pursue their vision without becoming too exposed to market fluctuations.

(3) Companies should be able, subject to safeguards established under Union and national law, to choose capital and governance structures that best suit their development stage, including by enabling controlling shareholders to retain control of the company after accessing MTFs, which include SME growth markets, while enjoying the benefits of trading on those MTFs, provided that the rights of shareholders holding shares with lower voting rights are safeguarded.

(4) A multiple-vote share (MVS) structure is a form of control-enhancing mechanism, which can enable controlling shareholders to retain decision-making power in a company while raising funds from the public. An MVS structure involves at least two distinct classes of shares, each with a different number of votes per share. Under such a structure, at least one of the classes of shares has a lower number of votes per share than another class or classes of shares with voting rights. A share carrying a higher number of votes is an MVS. An MVS structure as defined in this Directive is not a structure where differences in voting rights are solely determined by different nominal values of shares.

(5) Any control-enhancing mechanism leveraging voting rights, other than an MVS structure, such as non-voting shares and shares with a veto right over certain decisions, should fall outside the scope of this Directive.

(6) Loyalty shares confer an additional number of votes on a shareholder that holds the shares for a designated period and complies with certain conditions. Loyalty shares are therefore a control-enhancing mechanism designed to foster long-term oriented ownership by shareholders rather than to increase the attractiveness of raising funds from the public. It is therefore not appropriate to include loyalty shares within the scope of this Directive.

(7) There are substantial differences between national provisions for MVS structures across Member States. Some Member States allow MVS structures, while others ban them. In some Member States, such a ban is limited to public companies, while in others it applies to all companies. The differences in national regimes create barriers to the free movement of capital within the internal market and create an uneven playing field for companies in different Member States. Companies in a Member State that bans MVS structures have to move to another Member State or even outside the Union, thereby facing higher costs, if they want to adopt an MVS structure with a view to seeking admission to trading of their shares on a market. In some cases, because of those higher costs, companies might decide not to raise funds from the public, which might limit their funding opportunities. Such considerations are particularly relevant for SMEs and start-ups that lack financial resources to cover those costs.

(8) In order to allow companies to seek admission to trading on an MTF without their controlling shareholders having to relinquish control, Member States should provide companies with the possibility to adopt MVS structures or to modify them with a view to seeking admission to trading on an MTF. Such possibility should not be conditional upon the provision of enhanced economic rights for shares which are not an MVS.

(9) While admission to trading on regulated markets is more suitable for larger and more mature companies, MTFs are generally more appropriate for SMEs. Furthermore, SME growth markets, a sub-category of MTFs, were specifically designed as SME-dedicated trading venues with a regulatory treatment that takes the particularities of SMEs into account. However, not all companies with securities listed on MTFs are SMEs. Directive 2014/65/EU of the European Parliament and of the Council requires that for an MTF to be registered as an SME growth market, SMEs are to constitute at least 50 % of the issuers whose financial instruments are admitted to trading on that MTF. Companies other than SMEs generally have more liquid securities and hence their admission to MTFs enables MTFs to generate higher trading fees to maintain profitability of their business model. Nevertheless, to ensure clarity for investors, all issuers on SME growth markets, irrespective of their size, are currently subject to the same rules. The same is true of all issuers on other MTFs. It is therefore appropriate that the introduction of the right to adopt or modify MVS structures with a view to seeking admission to trading apply to all types of companies listed in Annex II to Directive (EU) 2017/1132 of the European Parliament and of the Council to the extent that such companies can, under national law, issue shares and seek admission to trading of their shares on an MTF.

(10) Member States should be able to introduce, or maintain in force, national provisions that allow companies to adopt or modify MVS structures for purposes other than to seek admission to trading of shares on an MTF. That includes, inter alia, allowing companies to adopt or modify an MVS structure when seeking admission to trading on a regulated market, or ensuring that private companies can adopt or modify MVS structures without intending to request admission to trading of their shares. That also includes cases whereby companies transfer from an MTF to a regulated market, while retaining MVSs. Member States should also be able to prohibit or restrict MVS structures with a view other than to seeking admission to trading of shares on an MTF.

(11) Adopting or modifying an MVS structure, with a view to seeking admission to trading, usually requires an amendment of a company’s articles of association. To provide for fair treatment of shareholders, Member States should require that adoption or modification of an MVS structure with a view to seeking admission to trading, as well as any subsequent modification of an MVS structure in a way that affects the voting rights, should be subject to a decision by the general meeting of shareholders (‘general meeting’) by at least a qualified majority as specified under national law. Where there are several classes of shares, such decisions should also be subject to a separate vote in each class of shares the rights of which are affected.

(12) Companies should have flexibility as to the timing of the adoption or modification of MVS structures, provided that such adoption or modification is for the purpose of seeking admission to trading on an MTF. Member States should not prevent companies from adopting or modifying MVS structures before the moment of the admission of the shares to trading on an MTF. Member States should, however, be able to require that the exercise of the enhanced voting rights, which represent additional votes attached to MVSs compared to votes of shares of other classes, be conditional upon shares of the company being admitted to trading on an MTF. In that case and until the admission to trading, MVSs should have the same voting rights as other classes of shares in the company. That would ensure that MVSs specifically promote admission to trading on an MTF.

(13) An MVS structure might increase the risk that controlling shareholders extract private benefits from the company. Member States that already allow MVSs provide for safeguards to protect shareholders holding shares with lower voting rights. Existing safeguards vary between Member States due to national specificities and diverging company law systems. Notwithstanding that variation and 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 (TFEU), the approaches in national law on MVS structures as regards protection of the interests of shareholders holding shares with a lower voting right should be coordinated for companies exercising their right under this Directive to adopt or modify an MVS structure for the purpose of seeking admission to trading on an MTF.