The European Union‘s Listing Act aims to enhance the competitiveness of European capital markets by introducing regulatory reforms that simplify access to public markets. A key innovation is the introduction of multiple-vote share (MVS) structures, designed to provide companies — particularly small and medium-sized enterprises (SMEs) and high-growth firms — with greater flexibility in maintaining control post-IPO. Additionally, amendments to various EU Regulations and Directives seek to reduce regulatory burdens, streamline disclosure requirements and improve capital-raising efficiency. These measures are designed to encourage more companies, particularly SMEs and high-growth firms, to go public while ensuring investor protection and transparency. The aim of this article is to provide an overview of the Multiple-Vote Shares Directive and its transposition into national law as well as selected changes to the EU Prospectus Regulation.
1) Introduction
The EU initiative „Listing Act — making public capital markets more attractive for EU companies and facilitating access to capital for SMEs“ (Listing Act) was launched by the European Commission (EC) as part of a revitalization of the broader Capital Markets Union (CMU) of EU capital markets. On 14 November 2024, the following final components of the Listing Act were published in the Official Journal of the EU and, as EEA-relevant acts, are also expected to be incorporated into the EEA Agreement:
– Regulation (EU) 2024/2809 amending the EU Prospectus Regulation (PR), the EU Market Abuse Regulation (MAR) and EU Markets in Financial Instruments Regulation (MiFIR) (Listing Regulation);
– Directive (EU) 2024/2811 repealing Directive 2001/34/EC and amending the EU Markets in Financial Instruments Directive (MiFID II) (Listing Directive); and
– Directive (EU) 2024/2810 on multiple-vote share structures (MVSD).
Most provisions of the Listing Act have entered into force 20 days after publication, while some amendments will become applicable after 15 or 18 months. In addition, the European Securities and Markets Authority (ESMA) will be publishing a series of consultation papers and final reports to facilitate the effective implementation of the Listing Act.
The main aim of the Listing Act is to make EU public capital markets more attractive by implementing more flexible market rules that allow companies, in particular SMEs, to raise capital faster and cost-effectively while preserving transparency, investor protection and market integrity. The MVSD specifically seeks to counter the fragmentation of national laws in EU Member States that restrict the flexibility of companies to issue multiple-vote shares (MVS) when going public, which has been perceived as particularly important for innovative scale-ups.
This article will focus on the introduction of MVS structures and highlight some changes to the EU prospectus rules under the PR. These measures may have the potential to significantly enhance the competitiveness of European companies and make the European capital market more attractive to investors.
2) Multiple-Vote Shares Directive
MVS structures (so-called dual-class share structures) have always been a controversial corporate governance topic. They divide a company‘s share capital into different classes of shares with different voting rights, typically, with one class having one vote per share and another class having multiple votes per share. There has been a significant increase in recent years in the proportion of IPOs with dual-class share structures with disparate voting rights, especially in the US tech sector, and high-profile examples include Alphabet, Meta, News Corp, Snap and LinkedIn. Other major capital market jurisdictions (e.g., UK, Hong Kong, Singapore and Japan) also allow MVS.
Historically, the approach to MVS in the EU Members States has not been consistent. While the „one share — one vote“ principle was prevalent in many EU Member States and MVS structures were banned (e.g., Germany, Austria, Belgium), there is a long tradition of MVS structures in other EU Member States (e.g., Netherlands and Nordic countries). The diametrically different approaches to MVS among EU Member States not only restricted the free movement of capital within the EU single market, but also resulted in „regulatory arbitrage“ by some companies (e.g., Fiat Chrysler‘s move from Italy to the Netherlands).
a) Definition and scope
The MVSD is a key element of the EU Listing Act as it aims to facilitate the access of EU companies to EU capital markets, in particular for start-ups, family businesses and companies with long-term projects, where MVS allows shareholders to retain control after an IPO and listing of the shares. The ultimate goal is to eliminate any competitive disadvantages vis-à-vis major other capital markets jurisdictions and to create a more level playing field within the EU single market.
The MVSD demands the implementation of the directive into national laws and administrative provisions by 5 December 2026. At its core, the MVSD requires EU Member States to allow MVS structures for companies seeking admission of their shares on a multilateral trading facility (MTF), including SME growth markets, and whose shares are not already listed for trading on an MTF or a regulated market. Accordingly, it is aimed at companies seeking their initial listing on an MTF. The MVSD, however, does not apply to companies seeking a listing on regulated markets.
From a Swiss corporate law perspective, it is important to note that MVS structures where voting rights vary solely based on nominal value, such as voting shares (also called „non-genuine multiple voting shares“) pursuant to article 693 of the Swiss Code of Obligations, would not qualify as MVS pursuant to the MVSD. An MVS structure (also called „genuine multiple voting shares“) pursuant to the MVSD consists of at least two distinct shares classes, each assigned a different number of votes per share. In this setup, at least one class of shares has fewer votes per share compared to another class or classes with voting rights. In essence, a share is considered an MVS if it carries a higher number of votes.
b) Safeguards
Member States must also ensure that appropriate protective measures for minority shareholders are implemented. Protective measures are divided into mandatory protective measures and optional protective measures.
i. Mandatory safeguards
As a minimum standard for the decision of the company to implement, adopt or change an MVS structure, the MVSD requires a shareholders‘ resolution by at least a qualified majority as specified in the corporate law of the EU Member State (and, if applicable, a special resolution by each class of shares affected).
Member States also have to implement at least one of the following mandatory protective measures for minority shareholders:
– a maximum ratio for the number of votes associated with multiple voting shares compared to the number of votes for shares with the lowest voting rights; or
– a requirement for shareholders‘ resolutions, apart from those related to director appointments, removals or board-approved operational decisions, to also gain approval from a qualified majority of ordinary shareholders.
ii. Optional safeguards
Member States may introduce further optional protective measures, such as transfer-based, time-based and event-based sunset clauses. Such sunset clauses ensure that multiple voting rights lapse upon certain transfers, predefined time limits or the occurrence of certain events, thus returning to a „one share — one vote“ structure.
c) Transparency
Companies issuing multiple voting shares are subject to stricter transparency requirements as set out under article 5 MVSD. Accordingly, various disclosures under article 5(3) MVSD, such as information on share structure in detail (the number and distribution of voting rights; shares per class, including associated rights and obligations; percentage ownership of total capital) must be included in the prospectus and the annual financial report.
d) Flexibility in implementation
This regulation offers significant flexibility for national legislatures, particularly concerning protective measures. Consequently, nation-states are free to adopt a particularly liberal approach, for example, by setting a high voting rights limit and not implementing any optional safeguards.
Conversely, a country with a particularly restrictive stance could introduce various sunset clauses and impose additional protective measures regarding capital majority decisions in many matters related to capital increases and other financial measures.
e) Implementation example: German Future Financing Act
Some European Member States have been anticipating the MVSD and, therefore, already started its implantation. Such example would be Germany, which has already implemented the MVSD in the Future Financing Act (Zukunftsfinanzierungsgesetz) that entered into force on 15 December 2023. The implementation in Germany is an interesting example because the „one share — one vote“ principle was strongly entrenched in German corporate law (MVS structures were banned in Germany in 1998). Consequently, the Future Financing Act pursues a relatively restrictive approach. First, a unanimity requirement is necessary upon introduction, contrary to the provision of the MVSD that a qualified majority is sufficient, and, second, the maximum ratio of voting rights is limited to a 10-to-1 ratio (same as in Switzerland). In addition, many of the optional protection measures have been implemented, such as a broad transfer-based sunset clause, which also covers all transfers of individual and universal succession; and a time-based sunset clause, which takes effect at the latest 10 years after the company is listed on the stock exchange or the shares are included in the over-the-counter market, unless the articles of association provide for a shorter period. The only theoretical exception is a one-off extension for a further 10 years, which requires a three-quarter majority of the share capital. Germany‘s approach, however, also permits MVS structures for the regulated market and thus goes beyond the minimum requirement of the MVSD.
f) Future prospects: opportunities and challenges
Because of the EU‘s (and other major capital market jurisdictions‘) more permissive stance on MVS structures, Swiss companies may be at a competitive disadvantage, particularly as global competition for IPOs intensifies. For this reason, Swiss companies seeking greater retention of control through differentiated voting structures might increasingly favor accessing capital markets through holding companies in the EU or elsewhere to benefit from greater flexibility in the implementation of MVS structures, which are not available under Swiss corporate law.
It can be argued that there are a number of advantages (including more control for founders and long-term strategic alignment, promotion of innovation, protection against short-term profit-oriented investors and defense against hostile takeovers) in favor of multiple voting shares, especially when they are intended for start-ups and SMEs, but there are also potential disadvantages (such as conflicts of interest, unequal treatment of shareholders, entrenchment issues, transactions with related parties, dual roles and accumulation of functions, and disproportionate ownership structures).
Ultimately, however, it is up to each investor to make their own decision about where they want to invest. They can choose whether to support companies with MVS because they trust the founder‘s vision or whether they want the same level of influence as their capital represents, in which case they may avoid investing in companies with MVS structures. The future will show whether this new EU reform, aimed at standardizing a minimum benchmark across the EU, will contribute to the attractiveness of the capital market and promote more IPOs in the high-growth sector.
The ESMA will establish regulatory technical standards to determine the most suitable method for marking MVS.
3) Amendments to the Prospectus Regulation
A central goal of the CMU was and still is to facilitate access for companies, in particular for SMEs, to public markets within the Union, enabling them to tap into additional sources of financing and continue their growth. The former EU prospectus regime was complex and associated with high costs and low returns. The new changes made to the PR aim to simplify and streamline the listing process. As the amendments made by the Listing Act regarding the PR are quite extensive, not all specific regulations can be described in detail. The most important changes are summarized below.
a) Exemption from the requirement to publish a prospectus
A new exemption allows public offers of securities that are fungible with those already listed on a regulated or SME growth market if they do not exceed 30% of existing securities over 12 months. This applies if the issuer is not insolvent or going through restructuring. Previously, only admissions to trading had this exemption, with a 20% threshold, which has now increased to 30% for both public offers and admissions.
Additionally, the 20% threshold for admissions of shares from conversions, exchanges or exercised rights has also risen to 30%. A new exemption applies to fungible securities if the original securities have been listed for at least 18 months, if they are not linked to takeovers, mergers or divisions, and the issuer is financially stable.
Issuers must file, but do not need to seek approval for, an Annex IX Document with their national authority. This document (maximum of 11 A4 pages) includes issuance details, risks and a compliance statement with reporting and disclosure rules.
In addition, the prospectus exemption threshold for small securities offers has been revised as follows:
– The EUR 1 million exemption threshold has been removed.
– A new harmonized threshold of EUR 12 million over 12 months now applies as the general rule.
– Previously, Member States could exempt offers under EUR 8 million, but this optional threshold has been lowered to EUR 5 million.
These changes aim to help capital raising for listed companies, but their practical impact, especially for large or non-EU transactions, remains uncertain.
b) EU Follow-On Prospectus
The simplified disclosure process for secondary fundraisings will be replaced by a new EU Follow-On Prospectus. This document must follow a standardized format and sequence, include essential information, and be limited to 50 A4 pages. However, certain types of information, which are also required in a standard prospectus (see 3d below), will not count toward this limit.
This change will take effect on 5 March 2026, 15 months after the amending Regulation comes into force.
c) EU Growth Issuance Prospectus
1. Currently, SMEs and smaller companies listed on an SME growth market can issue an EU Growth Prospectus with less detail than a full prospectus when raising funds through public share offerings. However, the EC believes the existing requirements still discourage SMEs from seeking equity funding as they are too similar to the standard prospectus to make a substantial difference for SMEs. To address this issue, the EC plans to reduce disclosure requirements and expand the range of eligible companies by introducing the new EU Growth Issuance Prospectus, which is now available for offerings up to EUR 50 million (previously EUR 20 million) and will be limited to a maximum length of 75 A4 pages. As with the EU Follow-On Prospectus, the new EU Growth Issuance Prospectus must follow a standardized format and sequence as a standard prospectus. However, certain types of required information (see 3d below) will not count toward the page limit.
2. This change will take effect on 5 March 2026, 15 months after the amending Regulation comes into force.
d) General simplification and standardization of prospectus formatting
The recent updates to the PR introduce the following key changes aimed at improving clarity, reducing excessive disclosure and enhancing ESG transparency:
– A limit of 300 A4 pages is being introduced for share prospectuses (excludes summaries, information incorporated by reference and additional disclosures for complex cases). Bonds are exempt.
– An exemption for third-country offerings is introduced, ensuring that when securities are admitted to trading on a regulated market in the EU and simultaneously offered or privately placed with investors in a third country — where an offering document is prepared according to local laws, rules or market practices — the requirements regarding standardized format, order, maximum length, template and layout (including font size and stylistic requirements) do not apply to the prospectus for admission to trading on an EU-regulated market.
– Prospectus summary is extended by one extra page per guarantor.
– Standardized format and sequence to be specified by a future delegated act.
– ESG disclosures are required, including environmental risk factors and sustainability reporting for certain issuers.
e) Third-country equivalence
Under the revised PR, issuers from non-EEA Member States can offer securities to the public within the EU or apply for trading on an EU regulated market if they have published a prospectus in accordance with their national laws (such as those of Switzerland or the US, if the prospectus rules of the third-country have been deemed equivalent). This is contingent upon several conditions, including:
– The EC must have issued an implementing act confirming that the legal and supervisory framework of the third country imposes equivalent prospectus requirements.
– The competent authority of the home Member State, or the ESMA if applicable, must have established cooperation arrangements with the relevant supervisory authorities of the third country for information exchange and enforcement.
– The prospectus must be approved by the supervisory authority of the third country.
Currently, there is no effective mechanism for an EU competent authority to recognize a Swiss prospectus as equivalent. This change could potentially help the establishment of such a mechanism, though additional steps will be necessary for it to become operational.
f) Further amendments
1. While the Listing Act did not introduce a mandatory incorporation by reference (contrary to the EC‘s original proposal), issuers can still voluntarily include external information. The PR clarifies that nonmandatory but accessible information can also be incorporated by reference on a voluntary basis under certain conditions. In addition, there is no obligation to update financial information in valid base prospectuses through supplements, reducing administrative effort. Furthermore, the scope of permissible documents has been expanded to include, among others, sustainability reports and summaries required for certain fungible exemptions, increasing flexibility and reflecting the growing importance of sustainability information in financial markets.
2. Other additional notable changes include:
– IPO reading period for retail investors reduced from six to three trading days to speed up book-building while maintaining retail participation.
– Withdrawal right period extended from two to three working days when a supplement is published.
4) Conclusion and outlook
The introduction of MVS structures and the amendments to the PR under the Listing Act might mark a significant step in the evolution of European capital markets. These reforms aim to make IPOs more attractive, particularly for high-growth firms and SMEs, by offering greater flexibility and reducing regulatory complexity.
From a Swiss perspective, these developments present both challenges and opportunities. While Switzerland‘s current corporate governance and prospectus regulation framework remains more restrictive, the increasing appeal of EU capital markets could incentivize a reevaluation of existing Swiss regulations. Striking a balance between maintaining market integrity and enhancing competitiveness will be crucial in ensuring Switzerland remains an attractive financial hub.
In the coming years, the Swiss financial industry and policymakers will need to monitor the impact of these EU reforms closely. If the Listing Act successfully revitalizes European capital markets, Switzerland may need to adapt its regulatory framework to remain aligned with international trends while preserving its well-established governance principles. Whether through incremental reforms or broader regulatory shifts, Switzerland‘s response to these changes will shape its future role in the global financial landscape.
Daniel Bono (daniel.bono@nkf.ch)
Nicolas M. Keil (nicolas.keil@nkf.ch)