Loyalty Shares: An Italian Perspective

The ability for companies to implement dual-class and loyalty share mechanisms varies broadly from one legal system to another, due to different approaches to dual-class shares that entitle shareholders to exercise multiple voting rights.

In this insight, Francesco Surace analyses the implications of the adoption of dual-class and loyalty share mechanisms in Italy and Spain, posing some key questions:

1. Are double voting rights or loyalty shares useful systems to reward longterm shareholders or do they serve to strengthen positions of control?
2. Does the introduction of majority voting require new governance for the companies that adopt it?
3. Are there more efficient systems than double voting rights to reward long-term investors?
4. Does the introduction of double voting rights make it necessary to think about some forms of balancing or corrective measures to corporate governance?