ECGS commented on Italian Consob’s consultation on multiple voting rights

Frontis Governance, the Italian partner of ECGS and first Italian proxy advisory firm, led by Sergio Carbonara presented its comments on the new Italian legislative provisions threatening the basic principle of equality of all shareholders. Like in France ECGS partners demonstrate their strong opposition to the introduction of multiple voting rights, as a breach of the “one share – one vote” principle and a departure from shareholder democracy. 

While the Italian market is still characterised by a high concentration of ownership and control, the aggregate market capitalisation strongly decreased over the last 10 years ranking 23rd in the World in 2013 from 13th in 2003. The new possibility will further strengthen the major shareholders’ power and will put a discount on the Italian stocks.

In France according to Proxinvest, ECGS member, there would be approximately 60% more rejected resolutions without the unfair play of the double voting right. The possibility to assign an additional voting right per share will differentiate between registered and unregistered long-term shareholders and will only benefit local big shareholders, at the detriment of foreign shareholders and Italian independent investors.

There have been many examples of financial disasters caused by the excessive power of controlling shareholders in Italy and other European markets (Fondiaria-Sai and Banco Espirito Santo are just two recent and well-known cases). In our opinion, measures aimed at increasing the efficiency and effectiveness of internal and external controls are much more appropriate to attract foreign investors than strengthening the controlling shareholders’ power.

We believe at ECGS that the stability is guaranteed by an effective management, rather than by the presence of “domineering fathers”, the defensive measure against instability is the creation of sustainable value in the long term.

Therefore Frontis Governance and ECGS will recommend opposing in Italy as in France all resolutions aimed at allowing the possibility to issue additional voting rights per share.


See on the Frontis governance site our answers to Consob’s questions.