Italy considers share voting changes to keep companies at home

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ROME (Reuters) – Italy is considering incentives to discourage listed companies from moving abroad and help long-standing Italian shareholders ward off hostile bids, a draft decree seen by Reuters shows.

The scheme, which has still to be finalised, would allow Italian firms to adopt a share scheme that gives investors greater voting sway than warranted by their actual holding, strengthening their control over companies.

Big Italian companies have moved to a holding structure with a legal base in the Netherlands in recent years. In the cases of Fiat Chrysler (MI:FCHA) and Ferrari (MI:RACE), this has allowed the Agnelli family, the controlling shareholder, to tighten its grip on the carmakers through a multiple voting share scheme.

Allowing a similar structure in Italy could help the government of the 5-Star Movement and the centre-left PD party make the Milan stock exchange more attractive to many family-led companies, who are reluctant to open up their share capital to outside investors for fear of losing their influence.

“There have been cases in which the decision of Italian listed companies to move abroad was also motivated by the possibility of availing oneself of a legal framework in favour of multi-voting shares,” a report attached to the draft said.

The draft decree, which was seen by Reuters on Tuesday, would allow the by-laws of listed companies to include a provision for the creation of special shares which would grant a maximum of up to three votes per share.

Such incentives, which would need to be approved by a certain number of minority investors, are part of a 55 billion euro ($60 billion) stimulus package that Rome aims to approve on Tuesday or Wednesday to help its economy cope with the impact of the prolonged coronavirus lockdown.

Existing legislation prohibits listed Italian companies from issuing multiple-voting shares, except in the form of the so-called ‘loyalty share scheme’ that confers an additional voting right to long-dated shareholders of at least 24 months.

Beverage group Campari (MI:CPRI) said last year it planned to move its registered office to the Netherlands.

Meanwhile broadcaster Mediaset (MI:MS), controlled by former Prime Minister Silvio Berlusconi’s family, is reorganising its domestic and Spanish businesses under a Dutch-based entity to include an enhanced loyalty share scheme.

($1 = 0.9224 euros)

(Additional reporting in Milan by Giulio Piovaccari and Francesca Landini; Editing by Alexander Smith) OLUSECON Reuters US Online Report Economy 20200512T161444+0000