On so-called “tracking shares”

1. Concept

Although they are still virtually untested in Spanish praxis, increasingly often traders wonder about the possibility of issuing shares where the holders’ participation in corporate earnings is modulated or defined by the financial performance of one of the issuer’s lines of business.Such tracking shares ( «azioni correlate» in Italian and «acciones sectoriales» according to several Spanish academics [Vaquerizo, «La emisión de acciones vinculadas a un sector de actividad de la sociedad emisora», RdS, 41, 2013, pp. 59 et seq.]) exhibit an important feature: the dividend to which the tracking shareholder is entitled is determined (to a greater or lesser extent, depending on the particular arrangement under the articles of association) by the profits earned by a line, division, production unit or subsidiary. In graphic terms, these shares «track», as for the dividend right, the behaviour of a certain line of business (so that the profitability for the tracking shareholders is ‘aligned’ to some extent with such behaviour). Financially, the performance of the investment materialized in the purchase of these shares is in step with the performance of the line of business it tracks…