That forgotten rule on the increased dividend

Hold on to your shares and forget you have them. This is the mantra of the 'cassettisti': investors who buy shares, possibly of emblazoned companies, and then keep them in the drawer in the hope of seeing a linear increase in the share price over time. They also aim to take home a dividend every year, more or less rich, and this is enough to make them sleep soundly.

This type of investor is much appreciated by those who lead listed companies, especially when the stock markets snap back sharply: the presence on the shareholder register of shareholders oriented towards long-term investments could be an antidote to the fluctuations in stock market prices that could also destabilise corporate governance.

But no company listed on the Italian Stock Exchange provides incentives to bring in and keep these long-term investors in its shareholding structure. Yet since 5 March 2010, with the amendment to the Consolidated Law on Finance made by Legislative Decree No. 27, which transposed EU Directive 2007/36 on shareholders' rights, listed companies have been given the option (not an obligation) to include in their Articles of Association the possibility of awarding an increased dividend of up to 10 per cent for the longest shareholders who hold the stock for a long time: Article 123-quater of the Consolidated Law on Finance provides for at least one year (the Articles of Association may provide for longer periods). Moreover, the incentive can only be provided for shareholders who do not exercise a dominant influence over the company (neither directly nor through shareholders' agreements). In any case, the bonus may only benefit shareholders who do not hold more than 0.5% (or the lower percentage indicated in the Articles of Association).

The aim is to reward the long-term loyalty of small shareholders, without creating special categories of shares, but applying the incentive uniformly to those who remain shareholders for the required time without interruption. The surcharge does not alter the total dividends declared, but proportionally reduces those for other shareholders, thus incentivising share stability and not speculative investment. To date, however, no company listed on the Italian Stock Exchange has ever expressly adopted in its Articles of Association the dividend surcharge for shareholders who are shareholders of record.

In the past, directors of major listed companies have ruled out the adoption of this clause in assemblies convened for other statutory adjustments, citing regulatory uncertainties and operational difficulties in identifying those entitled. An obstacle, the latter, which with goodwill is now easily overcome. On the other hand, on the other hand, they are ready to overcome any barrier to include mechanisms such as increased voting (Art. 127-quinquies Tuf), because of their dynamics linked to corporate governance. Then we do not complain if small shareholders do not hold shares permanently for a long time.