This article analyses how increased voting, a system whereby a share is awarded two votes if it is held for more than two years, works in Italian companies that adapted that measure.
The introduction of tenure-based voting shares in Italy was aimed at fighting short-termism, which had led firms to sacrifice chances of a greater long-term gain in order to achieve a profit in the short term. However, in the United States the increase of institutional investors did not have such negative impact despite shorttermism itself has been a burning issue for decades. (That observation explains why American controlling shareholders have used shares with increased voting rights to strengthen their power.)
Furthermore, the article investigates dual companies, enterprises with more than one class of shares, explains why such companies have to be considered legitimate, how they benefit from one-share-one-vote principle and why dual companies should include a sunset clause. Finally, the article draws to the conclusion that companies with increased voting shares should be allowed because dual companies are the most functional.
Business Law Review