A policy proposal for multiple voting shares in Belgian listed companies

Since 1934, multiple voting shares have been prohibited for Belgian listed companies. In 2019, the Belgian legislator introduced the possibility to adopt multiple voting shares in non-listed companies, but only allowed listed companies to adopt loyalty voting shares, which grant double voting rights to shareholders who have held their shares for more than two years in registered form. These loyalty voting shares have had only a modest success: they have been introduced by 14 companies listed on Euronext Brussels, 3 of which have since been delisted. We consider such loyalty voting shares a poor alternative for true multiple voting shares, as they have not been proven attractive for companies at the IPO phase, and have only been introduced by already listed companies, often without the support of minority shareholders (as discussed in our previous blogpost).

However, Belgium will soon have to adapt its stance towards multiple voting shares, at least for some companies. In 2024, the EU adopted the Multiple-Vote Shares Directive, which requires EU member states to allow multiple voting shares in companies that seek admission to trading of their shares on a multilateral trading facility (‘MTF’). 

In a recent paper, we argue that Belgium should use this opportunity to introduce a broader reform of multiple voting shares: the legislator should extend the scope of multiple voting shares not only to companies that seek listing on an MTF, but also to companies that seek listing on a  regulated market, as well as to companies already listed on an MTF or regulated market (so-called ‘midstream’ introductions). In addition, we propose that companies are granted sufficient flexibility to design a multiple voting share structure in line with their needs, while also protecting minority shareholders when multiple voting shares are introduced in the midstream. Our proposals are based on the proposals formulated by a working group within the Belgian Centre for Company Law on how to implement the Multiple-Vote Shares Directive (available here in Dutch and French). 

In our view, multiple voting shares should also be allowed for companies listing on a regulated market, because the reform would have little practical relevance otherwise, as only 15 companies are listed on a Belgian MTF. In addition, allowing multiple voting shares for MTFs, but not for regulated markets, would limit the possibility of ‘uplisting’ (i.e. transferring from trading on an MTF to trading on a regulated market). Third, the competitiveness of Belgium as an incorporation destination for listed companies requires that Belgium keeps up with the trend in other countries that already allow multiple voting shares for companies listed on a regulated market, such as the US, the UK, the Netherlands, France, Germany, Sweden, Italy and Spain. Underlying these arguments is our belief that multiple voting shares could be valuable for at least some listed companies, by facilitating controlling shareholder with a long-term vision for the company to take the company public while retaining control. Although multiple voting shares also come with increased risks of extraction of private benefits of control, shareholders should be free to decide for themselves whether to invest in a company with multiple voting shares.

We also argue that a midstream introduction of multiple voting shares should be allowed. Multiple voting shares may become useful during the lifecycle of the company, for example, when a cash-constrained controlling shareholder wants to raise additional capital to finance investment without losing control over the company. Moreover, since the Belgian companies that are already listed never had the opportunity to adopt multiple voting shares before the reform, banning midstream introductions of multiple voting shares would create an uneven playing field between companies that were already listed at the time of the reform and those that were not. 

However, there are additional risks to the midstream adoption of multiple voting shares: multiple voting shares may be primarily extractive in some companies, and such risk of an inefficient midstream adoption may not have been discounted into the stock price, as multiple voting shares were banned before in Belgium. If multiple voting shares are adopted in the midstream, the existing shareholders are forced to invest in a company with multiple voting shares (unlike at the moment of the IPO), or sell their shares on the market, potentially at a discount. In our view, this does not justify banning midstream introductions of multiple voting shares (either explicitly or by requiring unanimous shareholder approval), as many other countries have done. Neither do we believe in the Dutch model, where multiple voting shares can be introduced with the normal majority for amending articles of association. Instead, we propose that multiple voting shares should be approved by a qualified ‘majority of the disinterested shareholders’: if shares with multiple voting shares are issued to an existing controlling shareholder, such a shareholder (and parties related to it) should not be allowed to vote on the decision. In our view, this strikes the best balance between flexibility and protection of minority shareholders.

We see the protection offered by an approval of a qualified majority of the disinterested shareholders as the most important protection for minority shareholders and we argue against mandatory limits on the design of multiple voting shares, such as sunset clauses or neutralisation of the multiple voting rights for certain important decisions. In our view, it would be difficult to design a sunset clause that fits the needs of all companies. Moreover, sunset clauses diminish the controlling shareholders’ certainty that they will be able to retain their control over the company, which may discourage them from taking the company public in the first place. We prefer to leave such design choices to companies and their shareholders. 

Because the Multiple-Vote Shares Directive requires a maximum voting ratio for multiple voting shares, we propose a relatively lenient maximum voting ratio of 1:20, which seems high enough to be attractive, whilst being low enough to ensure that controlling shareholders retain some financial ‘skin in the game’.

In conclusion, our policy proposals aim to launch the debate on the implementation of the Multiple-Vote Shares Directive in Belgium and convince the Belgian legislature of the desirability of a more flexible legal framework for multiple voting shares in Belgium. We welcome any feedback based on experiences from other jurisdictions.

This blogpost is based on the authors’ paper ‘Loyalty and Multiple Voting Shares in Listed Companies in Belgium: Current Legal Framework and Policy Proposals’, which was published in the journal European Company Law, and is available on SSRN here. The policy proposals formulated for the Belgian legislature can be found here.

Tom Vos is an Assistant Professor at Maastricht University and Visiting Professor at Jean-Pierre Blumberg Chair, Antwerp University.

Theo Monnens is an MLF Candidate at the University of Oxford and a PhD Candidate at the University of Antwerp.