The legislative procedure regarding the Listing Act and notably the proposal for a Directive on multiple-vote share structures in companies that seek the admission to trading of their shares on an SME growth market has reached its final stage. Some highly worrying proposals unfortunately remain among the points that will be negotiated between the European Parliament, the Council, and the Commission. Therefore, the Confederation of Swedish Enterprise now calls on the legislators to remain focused on the purpose of the proposed Directive, which is to strengthen the capital markets within the EU.
Enabling access to private capital within the EU is key for European companies to be competitive and innovative and for their ability to contribute to the green transition. Over the last few years, we have seen a fall in initial public offerings (IPOs) within the EU and a decrease in the number of listed companies. It has therefore been positive to see initiatives at the EU level to turn the trend (including, importantly, the Listing Act as proposed by the Commission) aiming to strengthen the capital markets, and to make it easier to be a listed company, especially for small and medium-sized companies. Rules facilitating listings and keeping companies listed within the EU are most welcome, not least since a favorable set of rules will be a key enabling factor to make the capital markets within the EU more attractive, and in turn secure innovation and the necessary contribution of the business community to the green transition.
The proposals are far-reaching and deeply concerning as they would not only make it less attractive to go public and list on the market (contrary to the aim of the proposed Directive) but also risk ruining existing well-functioning structures in the Member States
However, some proposals put forward by the European Parliament and the Commission stand in sharp contrast to the initial purpose of the legal act and would counteract the said objective to strengthen the EU capital markets. The proposals are far-reaching and deeply concerning as they would not only make it less attractive to go public and list on the market (contrary to the aim of the proposed Directive) but also risk ruining existing well-functioning structures in the Member States. Today, twelve EU Member States allow multiple-vote share structures, including Sweden. In our opinion, a successful minimum level of harmonization must accommodate differences in national practices, and we strongly oppose the introduction of a Directive with restrictions that would be counterproductive and highly disruptive.
In Sweden, it has been possible for listed companies to have multiple-vote share structures for a hundred years, and the Swedish corporate governance landscape is designed to secure due minority protection. Combining the worrying proposals up for discussion with a proposed extension of the scope of application to all regulated markets (not only SME growth markets) would be highly counterproductive and disruptive to existing well-functioning structures. In brief, the proposals to which the Confederation of Swedish Enterprise wants to express our strong disagreement include the following:
1. Limitation of the right to use enhanced voting rights at general shareholders meetings when the matter has been tabled by a shareholder. As shareholders have extensive rights to table matters to shareholders meeting in Sweden and in the Nordics, and resolutions adopted are binding, this would have far-reaching consequences and would be counterproductive to the purpose of the Directive.
2. Maximum voting ratios and a maximum percentage of the capital that could consist of multiple-vote shares. There is no empirical support for these provisions, and they would not benefit from harmonization.
3. Voluntary restrictions that encourage Member States to include additional restrictions. The voluntary restrictions proposed are not evidence-based. It is highly inappropriate and stands in sharp contrast to the objectives of the proposed Directive to encourage Member States to adopt such additional restrictions.
4. Transparency rules that would be impossible for companies to comply with in practice. Transparency on holders of multiple-vote share structures traded publicly cannot go beyond what is known to the company.
We are not aware of any problems in the Member States allowing multiple-vote share structures that would be solved by the above proposals. However, introducing such restrictions in these countries will create new problems and disrupt what is working well today. In this context it should be mentioned that Sweden’s equity market is the only growing market within the EU. The dual class system with all that it entails is believed to be one of the key factors behind the vibrant Swedish equity market. It makes no sense whatsoever for the EU to introduce counterproductive restrictions that would have a detrimental effect on markets that are today well-functioning, such as the Swedish market.
We therefore now call on the legislators to focus on making sure that the important objectives of the Listing Act are materialized, meaning we strengthen the capital markets within the EU and improve conditions for SMEs, our most important catalyst for growth. When doing so, it should be easy to stand firm and insist that the above restrictions must not be adopted.Bolags- och börsrättBolagsstyrning (corporate governance)