Change in MSCI’s indexes related to dual shares is postponed to October

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In the end of June, the MSCI index announced its intention to broaden the consultation to include a discussion on the treatment of companies with unequal voting structures; its decision will be announced in October. Since the beginning of the year, the MSCI has been discussing with market participants a proposal to change the composition of its indexes to reflect the presence of companies with dual shares. The measure affects tech giants, such as Google, Facebook, Snap, Dropbox, as well as powerful companies, such as Berkshire Hathaway. Brazilian companies that do not adopt the one share one vote principle, such as Itaú Unibanco, Bradesco and Gerdau, would also be affected.
Other two major index providers have already expressed their opinions about the topic. Last year, S&P Dow Jones announced that issuers with multi-class capital structures will be excluded from the S&P 1500 index and its derivatives. The measure is valid only for the US market and does not apply to the companies that are already part of its portfolio. Index provider FT/Russel has adopted the liquidity criteria by allowing the inclusion of companies that have at least 5% of their voting rights in the hands of free-float shareholders.
According to Reuters, more than US$ 660 billion in passive funds follow the MSCI indexes. In addition to the economic impact, the potential change to the indexes has generated a lot of discussion. In April, BlackRock, the world’s largest fund manager, said that regulators, not index providers, should be responsible for establishing the standards for shareholders’ voting rights.