(Fixes typographical error in first quote)

Valentina Za and Giuseppe Fonte

ROME, (Reuters) – Italy is considering overhauling voting and listing rules in an effort to reduce the delays that have been preventing the country from accessing its capital markets. The move will also help Milan compete against European counterparts, according to a Treasury document.

Milan has a total capitalisation of 800billion euros (890 billion), which is far less than Paris’s market capitalisation of 3.7 trillion euros. Amsterdam boasts an even larger capitalisation at 1.4 trillion euros.

The document stated that Italy’s capital markets are chronically behind other advanced economies. This was partly due the weakness of Italy’s echosystem, and partly because of regulatory hurdles.

The Treasury stated that Italy was considering a number of measures to increase voting rights to allow owners to list businesses in Milan, without fearing losing control to others shareholders.

As policymakers globally debate extending differentiated voting rights to promote investments, BlackRock (NYSE:), the world’s largest asset manager, has said it felt necessary to reiterate its support for the “one share, one vote” principle https://www.blackrock.com/corporate/literature/whitepaper/blackrock-the-debate-on-differentiated-voting-rights.pdf.

Numerous top Italian companies, which have been able to retain a strong grip on their companies through a regulatory structure that assists them in governing the company’s affairs in general, chose to move to the Netherlands as a legal domicile while still being listed in Milan.

Stellantis, Ferrari, drinks group Campari and MFE are all moving their registered offices to The Netherlands. This is where their shareholders meetings take place.

The document stated that rules to increase voting rights, such as loyalty shares and multiple voting shares, are being reexamined in an effort to determine if it makes sense to improve their effectiveness to make Italy more appealing for businesses to establish base and lists.

The Treasury recommended that listed companies could issue special shares to give investors the right to vote for more than three shares at shareholder meetings. This would go beyond the existing limit of three.

EPIC IPO DOCUMENTS

According to the paper, another step could be taken to increase initial public offerings in Milan. This would include simplifying the listing process. Current rules are too complicated and costly for companies to disclose adequate risks to investors.

This means that prospectus documents may often exceed 100 pages.

According to the document, excessive information “risks, at the end-of-the day, producing similar negative effects to a lack thereof,” suggesting that there should be a maximum of 300 pages.

Consob’s discussion paper, “The long winding road,” was titled by the Italian market regulator. It found that the number of pages per equity prospectus approved by Consob is 406, compared to 298 for Germany (the country with the lowest average).

Additionally, Treasury recommended that the provision to protect savers which holds employees of banks like Consob or Bank of Italy responsible for damages in serious misconduct cases be repealed. Staff of other institutions would not be subject to liability in such instances.

According to the document, “There is a possibility to establish a rule which would restrict legal action for damages only towards institutions and not their top executives/staff.”

Employees who are willing to shield others could accelerate the approval process. According to Enrico Giordano from Chiomenti law firm, it takes between six and 10 weeks for the formal filing to the IPO prospectus in Italy. It is slower than other countries.

A direct listing is a way to bypass the formal IPO process. This allows a company to sell its existing shares on the open markets directly, thereby saving money and avoiding the need for middlemen such as underwriters.

Direct listing is offered by the London Stock Exchange. In 2020, the Milan bourse was sold to Euronext.

($1 = 0.8990 euros)