Loyalty Shares, a reality in Spain
Through loyalty shares, issuers will be able to modify the ratio between the nominal value of the share and the voting rights to confer a double vote on each share. To do so, the holder of the securities must have been the same shareholder for at least two consecutive uninterrupted years from the date of entry in the Special Register Book.
This Special Register Book will include the information of all shareholders who have indicated that they wish to have access to the possibility of double voting and will be managed by the issuer or a provider thereof.
In addition, the issuer will appoint an authorized entity who will be in charge of the arrangements related to the established Loyalty Share programme.
The inclusion of Loyalty Shares is intended to encourage the long-term involvement of shareholders in listed companies. In return, shareholders will obtain double the voting rights of an ordinary share.
The service provided by Iberclear consists of management through 3 different ISINs, the ordinary ISIN, the loyalty building ISIN and the double voting or loyalty ISIN.
- Loyalty building ISIN: this ISIN code identifies, once validated by the issuer or its authorized entity, those shares in respect of which the holder has applied for registration in the Special Register Book and which have not yet met the deadline established by the issuer to obtain the attribution of double voting rights.
- Loyalty or Double Voting ISIN: this ISIN code identifies those shares which, having met the minimum period established by the issuer under the loyalty building ISIN, have been granted double voting rights.
The total balance of the issue will not change, but will be divided into 3 different types of shares, as is the case for companies with A and B share types conferring different rights.
Registration in the Special Share Register Book will be done by means of an exchange corporate event that the authorised entity of the issuer will manage with Iberclear.
When a shareholder indicates to its custodian that it wishes to participate in the loyalty share programme, the custodian must send an instruction to participate in the exchange event.
Through a first exchange, the ordinary ISIN position will be exchanged for the Loyalty Building ISIN and after the necessary time, through a second exchange, the position will be exchanged from the Loyalty Building ISIN to the Loyalty or Double Voting ISIN.
The issuer and its authorized entity must authorize the entry in the Special Register Book once they have validated the information they have requested from the shareholder.
Loyalty shares may not be traded or exchanged in their Loyalty Building ISIN or in the Loyalty or Double Voting ISIN, except in the specific cases included in the law, such as inheritance, structural modifications of commercial companies or transfer between companies in the same group.
As published by Expansión, the possibility of incorporating the figure of loyalty shares in their corporate statutes is an additional possibility for Spanish issuers since the approval of Law 5/2021, of 12 April, which amends the Corporate Enterprises Act and other financial regulations related to the promotion of long-term shareholder involvement in listed companies.
Loyalty shares are already implemented in other countries such as France and Italy, where shareholders can access double voting in those companies that have implemented them.
