*

Milan stock exchange lost prominent companies in recent
years

*

Treasury eyes multiple-vote shares to attract newcomers

*

Draft bill strengthens self-placement, limits damage
claims

(Updates with government approval)

By Giuseppe Fonte

ROME, April 11 (Reuters) – Italy approved on Tuesday a
bill that aims to strengthen the country’s capital markets and
reinforce the Milan Stock Exchange’s ability to compete with
European peers, government officials said.

The proposed measures aim to speed up the listing process
and attract newcomers to the Borsa Italiana, after the loss of
some prominent companies over recent years.

The plans include enhancing voting rights to persuade
entrepreneurs to list their businesses in Milan without worrying
about losing control to other investors, a draft seen by Reuters
showed.

Some of the companies that have delisted from Milan were
drawn to bourses, such as Amsterdam, where regulations allow
leading shareholders to maintain a tighter grip.

The bill allows non-listed companies to issue special shares
that give existing investors the right to cast up to 10 votes
for each share owned, surpassing the current limit of three
votes. Companies are able to preserve these shares following the
initial public offer (IPO).

Current Italian rules prohibit listed firms from issuing
multiple-vote shares, except in the form of what are known as
loyalty share schemes that confer double voting rights to
long-standing shareholders of at least 24 months.

Institutional investors usually advocate for the “one share,
one vote” principle to grant equal treatment to all
shareholders.

The Treasury believes that strengthening the ability to
issue multiple-vote shares prior to listing is a good
compromise, because any investors in the company would know in
advance that after the IPO they would be sharing ownership with
more powerful shareholders, the officials said.

Rome also wants to allow a wider range of firms to benefit
from incentives already provided for small and medium-sized
enterprises (SMEs) that plan to list.

A company is classified as an SME when its capitalisation is
below 500 million euros ($545.05 million). The draft bill would
increase that threshold to 1 billion euros.

Another measure would reduce the extent to which regulators,
such as market watchdog Consob, can be held responsible for
investor losses, which the Treasury believes could speed up the
IPO approval process.

Under the bill, the institution will only be responsible for
direct damages due to omissions or mistakes in supervisory
activities.

In addition, the scheme increases the possibility of
bypassing the formal IPO process through a self-placement that
would allow a company to sell shares directly and save the money
required to line up underwriters as middlemen.

($1 = 0.9173 euros)
(Reporting by Giuseppe Fonte; Editing by Sharon Singleton and
Barbara Lewis)