June 14, 2022

Dual-Class Shares: Investors Launch “Coalition for Equal Votes”

Emily blogged yesterday that proposals to eliminate dual-class structures are receiving record support this proxy season. A new $1 trillion coalition of investors – including the CII, New York City Comptroller, and several state retirement funds – is committing to stopping unrestrained dual-class structures as companies go public. Here’s an excerpt from the announcement:

The group, which is expected to grow over time to include additional asset owners and potentially asset managers, will dialogue with key market participants and policymakers, emphasising the importance of the proportionate shareholder voice to effective stewardship and long-term sustainable company performance – and ultimately preventing the further enabling of dual-class share structures, without strict mandatory time-based sunset clauses, in jurisdictions like the US and UK.

In the first phase of the initiative, ICEV will undertake a campaign with pre-IPO companies and their advisers, as well as policymakers, commentators and index providers in priority jurisdictions. This will take place through engagements with both private and public market participants as well as in policy forums.

The announcement includes a reminder that CII has drafted legislation that would require national stock exchanges to bar listings of new dual-class companies unless they have seven-year sunset provisions, or if each class, voting separately, approves the unequal structure within seven years of the IPO.

Liz Dunshee