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Corporate Governance · Dual-Class Shares · Investor Activism · Voting Rights
Global institutional investors, including the Investor Coalition for Equal Votes (ICEV) with $4 trillion AUM, are actively sanctioning companies that employ dual-class share structures (DCSS) without time-based sunset clauses, using their voting power to push for "one share, one vote" principles and improved long-term corporate governance.
DCSS, which grant disproportionate voting power to insiders, have increased in recent years, accompanied by regulatory rollbacks in the UK, Europe, and Asia, diluting public shareholders' influence. Research cited in the Harvard Law School Forum on Corporate Governance article indicates that management entrenchment from DCSS hinders long-term financial performance, with any potential advantages receding rapidly.
Major investor groups like the Council of Institutional Investors (CII), International Corporate Governance Network (ICGN), Asian Corporate Governance Association (ACGA), and Australian Council of Superannuation Investors (ACSI) consistently oppose DCSS. Proxy advisors Glass Lewis and ISS also recommend voting against directors at companies with DCSS lacking reasonable sunset provisions, generally seven years or less.
Investors categorize their actions by voting against directors at DCSS companies, against 'dual-class enabling' directors on other boards, and in favor of shareholder proposals seeking recapitalization or class-by-class vote disclosure.
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