SMEs at Growth Markets: Are Multiple Voting Shares the Answer?

Abstract

The EU has repeatedly attempted to harmonize rules concerning multiple voting shares. Previous efforts have, however, been terminated during the legislative process, but in 2024, Directive (EU) 2024/2810 was adopted. The Directive aims to reinforce the attractiveness of listing on SME growth markets and other multilateral trading facilities through multiple voting shares, by balancing the ability of controlling shareholders to retain control with the protection of minority shareholders. In this thesis it is examined whether the objective of Directive (EU) 2024/2810 is fulfilled at a national level in order to determine whether multiple voting shares affect the attractiveness of listing on an SME growth market. Through a comparative legal analysis, it is concluded that despite legislative differences in Denmark, Germany, and the England, majority shareholders can gain control while minority shareholders are protected through several shareholder rights. It is therefore assessed that the Directive’s objective is already met in national legislation. In the economic analysis, it is concluded that principal-agent problems in companies with multiple voting shares are partially mitigated by the national regulations, and that further EU regulations would not necessarily add value but may lead to inefficient costs due to additional monitoring and control. Through a game-theoretical analysis, it is concluded that a company’s decision to list on an SME growth market depends only to a limited extent on its ability to gain increased control through multiple voting shares, as other factors, including systemic flaws in the SME growth market, play a significant role in a company’s financing decisions. The thesis ultimately questions the EU’s repeated attempts at harmonization, despite the Directive’s objectives already being met in the analyzed countries. The arguments in favor of harmonization, including encouraging long-term ownership and the elimination of regulatory inconsistencies, appear insufficiently substantiated. Considering the lack of clear evidence and the disregard for the principles of subsidiarity and proportionality, it is concluded that the Directive rather reflects a tendency toward overregulation, which risks undermining national flexibility. Lastly it is argued that the EU should shift focus from harmonizing rules on multiple voting shares to addressing structural inefficiencies in SME growth market.