What we do
Our approach
The Investor Coalition for Equal Votes (ICEV) encourages companies to adopt a ‘one share, one vote’ capital structure, or at the least to put in place time-based sunset provisions of seven years or less from the time of public listing. This is because unequal voting structures are most problematic when they extend beyond companies' earliest growth stages.
We seek to engage with the following:
- Companies before they list – when they're still open to conversations about capital structure
- IPO advisers – whose advice on capital structure is heeded by pre-IPO companies
- Policymakers – for the advancement of equal voting rights regulation and legislation where practicable and most effective
- Commentators – influencing the 'mood music' around the role equal voting rights play in supporting thriving capital markets
Cross-border impact
ICEV is most active in the US and UK – two key jurisdictions for dual-class share structures (DCSS). The US was the birthplace of DCSS and both the New York Stock Exchange and NASDAQ have allowed unequal voting rights for decades.
The UK has long been considered a beacon of strong corporate governance worldwide, so recent moves by policymakers to consider allowing unequal voting rights are deeply concerning and could help encourage a regulatory ‘race to the bottom’.
Unequal voting rights are a highly entrenched and material issue. So, we’re in this for the long haul, prepared to put our heads above the parapet, leveraging our combined knowledge and experience, to drive positive change.
Our recommendations
ICEV advocates for all companies to adopt a single-class share structure at the time of public listing, or as soon as possible thereafter. But, if a company adopts a dual-class share structure (DCSS), there should be an explicit time-based sunset clause that requires them to revert to a single-share class after a maximum of seven years.
We recommend that additional safeguards are put in place for investors during the period prior to any sunset trigger date, or in the absence of a sunset clause. We believe companies with dual-class or other unequal share structures should report publicly and accessibly on the nature of their share structure.
In our report Undermining the Shareholder Voice – the risk and risks of unequal voting rights (published November 2023), ICEV makes recommendations to support the phasing out of DCSS.
We believe our recommendations should be applied in all markets by:
- Companies
- Company advisers
- Stock exchanges and index providers
- Investors
- Policymakers and regulators
Adopt single-class share structures at IPO, or as soon as possible thereafter.
Adopt explicit time-based sunset clauses for any DCSS of no more than seven years from the date of public listing, at which time the company reverts to a single share class.
If sunset clauses are not adopted, adopt provisions that require periodic approval, at least every seven years, from a majority of each share class voting separately, for the dual-class share structure to continue.
Adopt supplemental safeguards for pivotal proposals brought to a shareholder vote.
Fully inform clients contemplating DCSS of the risks associated with them and why they are opposed by long-term investors.
Ensure that, where the structures are used, time-based sunset clauses are embedded in the governing documents pre-IPO.
index providers
Adopt listing standards and methodologies which discourage the use of DCSS.
Require companies with DCSS to have time-based sunset clauses or to periodically obtain majority approval from each class – voting separately – for the structure to continue.
Ensure that any dual-class companies admitted to listing or included in an index are clearly identified as having DCSS.
Publicly oppose DCSS, and adopt formal advocacy, engagement and voting policy decisions to that effect.
Work with market participants including companies, policymakers, stock exchanges and index providers to adopt policy measures that discourage the adoption of these structures.
Engage with pre-IPO companies and their advisers to explain the benefits of equal voting rights.
Use all stewardship tools at their disposal to urge companies with DCSS to explore the benefits of recapitalisation to restore equal voting rights.
regulators
Recognise the evidence on the negative impacts of DCSS and take steps to discourage companies from listing with these structures, unless it is with a suitable sunset clause and includes robust investor protections.
Take interim steps, in advance of more comprehensive market reforms, towards enhancing transparency from companies that list with DCSS.
