Loyalty Voting Rights in Belgium: Nothing More than a Control-Enhancing Mechanism?

Steven Declercq, Jeroen Delvoie, Theo Monnens, Tom Vos
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Abstract

Abstract 27In 2019, Belgium joined the European trend and allowed listed companies to adopt loyalty voting rights, i.e. double voting rights for shareholders who have held their shares for more than two years. The stated goals were to combat short-termism by rewarding long-term shareholders and to encourage IPOs by allowing founders to retain control over the corporation with a smaller participation. Our paper analyzes these rationales from a conceptual perspective, describes the Belgian legal framework for loyalty voting rights, and presents novel empirical evidence on the use of loyalty voting rights in Belgium. We argue that the Belgian legal framework is designed to favour controlling shareholders and other insiders. In addition, our empirical data supports the view that loyalty voting rights mainly function as a control-enhancing mechanism, as loyalty voting rights are almost exclusively used by insiders. This is not necessarily a problem, in our view, as controlling shareholders may be able to help combat the short-termism problem where it would exist. However, loyalty voting rights also increase the incentives for insiders to extract private benefits of control by creating a wedge between cash flow rights and voting rights. We find that this wedge in our Belgian sample has been on average 11 percentage points. In addition, our evidence finds that the votes of insiders were often sufficient to adopt loyalty voting rights, and that non-insiders on average vote against loyalty voting rights. This highlights the risk of making it too easy to introduce loyalty voting rights in the midstream. The arguments for allowing loyalty voting rights are the strongest when they are introduced at the IPO stage, but so far, none of the Belgian corporations with loyalty voting rights have introduced them at the IPO. We conclude that loyalty voting rights are nothing more than a control enhancing mechanism. This raises the questions: why not allow other types of control enhancing mechanisms, such as dual class share structures? And why not treat the midstream introduction of loyalty voting rights with a similar level of protection as the midstream introduction of dual class share structures? We fail to see the policy reasons for this wide divergence.28
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比利时的忠诚投票权:无非是一种加强控制的机制?
摘要272019年,比利时加入了欧洲潮流,允许上市公司采用忠诚投票权,即持有股票两年以上的股东享有双重投票权。声明的目标是通过奖励长期股东来打击短期主义,并通过允许创始人以较小的参与度保留对公司的控制权来鼓励首次公开募股。本文从概念的角度分析了这些理由,描述了比利时关于忠诚投票权的法律框架,并就比利时使用忠诚投票权提供了新的经验证据。我们认为,比利时的法律框架旨在有利于控股股东和其他内部人士。此外,我们的实证数据支持这样一种观点,即忠诚投票权主要作为一种控制增强机制,因为忠诚投票权几乎只由内部人士使用。在我们看来,这不一定是一个问题,因为控股股东可能能够帮助解决短期主义问题。然而,忠诚投票权也通过在现金流权和投票权之间制造隔阂,增加了内部人士从控制权中获取私人利益的动机。我们发现,比利时样本中的这一楔形平均为11个百分点。此外,我们的证据发现,内部人士的投票通常足以采用忠诚投票权,而非内部人士平均投票反对忠诚投票权。这凸显了在中期引入忠诚投票权过于容易的风险。在首次公开募股阶段引入忠诚投票权时,允许忠诚投票权的论点最为强烈,但到目前为止,没有一家拥有忠诚投票权在首次公开发行时引入忠诚投票。我们得出的结论是,忠诚投票权只不过是一种加强控制的机制。这就提出了一个问题:为什么不允许其他类型的控制增强机制,比如双重类别的股份结构?为什么不把忠诚投票权的中期引入与双重股权结构的中期引入同等程度的保护呢?我们看不出造成这种巨大分歧的政策原因。28
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来源期刊
CiteScore
1.00
自引率
16.70%
发文量
13
期刊介绍: In legislation and in case law, European law has become a steadily more dominant factor in determining national European company laws. The “European Company”, the forthcoming “European Private Company” as well as the Regulation on the Application of International Financial Reporting Standards (“IFRS Regulation”) have accelerated this development even more. The discussion, however, is still mired in individual nations. This is true for the academic field and – even still – for many practitioners. The journal intends to overcome this handicap by sparking a debate across Europe on drafting and application of European company law. It integrates the European company law component previously published as part of the Zeitschrift für Unternehmens- und Gesellschaftsrecht (ZGR), on of the leading German law reviews specialized in the field of company and capital market law. It aims at universities, law makers on both the European and national levels, courts, lawyers, banks and other financial service institutions, in house counsels, accountants and notaries who draft or work with European company law. The journal focuses on all areas of European company law and the financing of companies and business entities. This includes the law of capital markets as well as the law of accounting and auditing and company law related issues of insolvency law. Finally it serves as a platform for the discussion of theoretical questions such as the economic analysis of company law. It consists of articles and case notes on both decisions of the European courts as well as of national courts insofar as they have implications on European company law.
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