TheCorporateCounsel.net

For companies that are considering IPOs this year, capital structure is an important consideration. The “Investor Coalition for Equal Votes” – which was launched a few years ago to stop “unrestrained dual-class structures” as companies go public – recently released a 23-page report that summarizes the voting policies on dual-class structures of 31 of the world’s largest investors.

The report covers policies of asset owners & managers as they stood going into 2025. Although it remains to be seen whether recent Staff guidance will affect investor positions on this topic or the consequences they say they’ll impose, the report can give you a sense of investor sentiment for purposes of marketing a deal and long-term planning. Here’s an excerpt:

Although a spectrum of approaches is taken – from votes against ‘dual-class enabling’ directors at every company board they sit on, to expressing support for “one-share, one-vote” proposals – what is clear is that institutional investors have strong views on this issue. It is also the case that many investors are strengthening their lines over time, as well as using other escalation activities such as co-filing shareholder resolutions (including on class-by-class disclosure) and statements at Annual General Meetings (AGMs) and other meetings.

The report says that some investors are also beginning to vote against capital resolutions (e.g., share buybacks & issuances) at companies that have dual-class share structures. In addition to covering investors policies, ICEV also summarizes the policies of proxy advisors and global investor groups. Here in the U.S., the Council of Institutional Investors has made no secret of its preference for “one share, one vote” capital structures.

As I’ve shared on the Proxy Season Blog, despite investor disdain, proposals to eliminate dual-class share structures almost always face a steep uphill battle. However, that may not be a bad thing, because dual-class companies also tend to outperform single-class companies over the long term.

– Liz Dunshee