Belgian companies listed on a regulated market (such as, in Belgium, Euronext Brussels) or a multilateral trading facility (MTF, such as, in Belgium, Euronext Growth or Euronext Access) are currently prohibited from issuing multiple voting shares. However, they may adopt a system of loyalty voting shares in their articles of association, granting double voting rights to shareholders who have continuously held their shares in registered form for at least two years.
As part of the EU Listing Act package, Directive EU 2024/2810 on multiple voting share structures in companies seeking admission to trading on an MTF (the MVS Directive) was adopted on 4 December 2024.
The MVS Directive requires Member States to permit companies to introduce or maintain a multiple voting share structure when applying for admission to trading on an MTF, subject to certain safeguards. The aim is to make listings on trading platforms, particularly those targeting small and medium-sized enterprises (SMEs), more attractive by addressing a key concern of controlling shareholders: the potential loss of control. Multiple voting shares offer a solution by enabling these shareholders to retain control while accessing public capital.
A working group of academics and experts within the Belgian Centre for Company Law seized this opportunity to prepare a detailed proposal for the transposition of the MVS Directive, adopting a broader approach. This post discusses the working group's recommendations and explores how they could shape the future of voting rights structures in Belgian listed companies.
Beyond MTFs: application on regulated markets
Firstly, the working group proposes allowing a multiple voting share structure not only for companies seeking admission to trading on an MTF but also on a regulated market. The importance and attractiveness of MTFs in Belgium, such as Euronext Growth and Euronext Access, remain limited for equity listings.
Extending the possibility to regulated markets would enhance the appeal of both platforms. Restricting it to MTFs could hinder companies’ growth and transition to regulated markets, contradicting the notion that MTFs should serve as steppingstones to a broader listing. Other jurisdictions already permit multiple voting share structures on regulated markets. To avoid placing Belgium at a competitive disadvantage or prompting Belgian companies to list abroad, the working group recommends extending the scope of the reform to regulated markets.
Multiple voting share structures can incentivise more companies to go public by allowing controlling shareholders to retain control while accessing public capital. This enables them to implement long-term strategic visions and fund value-enhancing projects without relinquishing control or increasing personal financial exposure.
Controlling shareholders often bring added value. Their significant equity stakes typically align their interests with the company’s success, drive effective corporate governance, and equip them to oversee management effectively. Many are focused on long-term value creation, which can strengthen overall company performance. However, such structures may also entrench control and separate voting power from economic interest.
Beyond IPO: midstream application
The working group further proposes that the introduction of a multiple voting share structure should also be permitted midstream (i.e., after a company is already listed on an MTF or a regulated market).
Allowing midstream adoption ensures a level playing field between listed companies and those seeking to list. It also allows controlling shareholders to retain control while raising additional market capital to finance value-creating investments.
That said, midstream adoption introduces certain risks. It may result in a sudden shift of control without corresponding efficiency gains and may force existing shareholders with lower voting rights to either accept reduced influence or sell their shares, potentially at a discount. Unlike during an IPO, shareholders in a midstream adoption have limited recourse, since they were already shareholders before the introduction of a multiple voting share structure.
Some jurisdictions, like the US (through NYSE and Nasdaq rules), prohibit midstream adoption altogether, while others (e.g., Germany) make its application practically impossible by requiring unanimous shareholder consent. Nonetheless, the working group concludes that an absolute ban is not justified. Provided that adequate safeguards are implemented to protect minority shareholders, midstream adoption can be a meaningful and valuable tool during a company’s listed lifecycle.
Minority Protection: safeguards
To mitigate the risks associated with multiple voting shares, especially in midstream adoption scenarios, robust investor protection measures are essential.
Besides requiring a decision by the EGM with a qualified majority vote – and, in cases involving multiple share classes, a qualified majority within each class – the MVS Directive obliges Member States to implement one of the following two safeguards to protect minority shareholders:
- (i) a maximum voting ratio, or
- (ii) the neutralization of multiple voting rights for certain general meeting decisions requiring a qualified majority.
The working group opts for the first, most straightforward option: a maximum voting ratio of 1:20.
The MVS Directive also permits additional protections, such as a sunset clause, whereby multiple voting rights automatically lapse in certain circumstances or after a certain period. The working group does not support a mandatory sunset clause, arguing that the optimal duration of multiple voting rights varies significantly across companies. It further notes that imposing a sunset clause may deter controlling shareholders from pursuing a public listing.
Relationship with loyalty voting rights and other amendments to accommodate MVS
The working group acknowledges that implementing the MVS Directive requires broader reform of the existing legal framework. To effectively accommodate multiple voting share structures, several related provisions of the Belgian Code on Companies and Associations (BCCA) must be amended.
First, the working group proposes to modify the current optional regime of the loyalty shares (Article 7:53 BCCA):
- the working group sees no objection to the coexistence of loyalty voting rights and multiple voting rights, as they serve different purposes, but proposes banning their combination within a single company to prevent abuse and ensure transparency.
- the working group suggests restoring the qualified majority requirement for introducing loyalty voting rights to the usual 75% majority to change the articles of association, replacing the current 2/3rd majority, which in some cases has allowed the midstream introduction of loyalty voting shares exclusively with the support of the existing reference shareholders (who tend to benefit from loyalty voting rights) but without the approval of minority shareholders.
Additionally, the working group proposes certain technical changes which may also be relevant for non-listed companies:
- the procedure for amending class rights (Article 7:155 BCCA),
- the regulation of preferential subscription rights (Article 7:188 BCCA), and
- the framework for capital increases (Article 7:193 BCCA).
Finally, the working group has reviewed implications for the mandatory bid rules under Articles 5 and 74 of the Takeover Law and for the notification obligations under the Transparency Law. These adjustments are essential to ensure legal coherence and support the practical implementation of the proposed reforms.
