ICGN publishes new document advocating the one share, one vote structure

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The International Corporate Governance Network – ICGN, which gathers investors with assets under management of approximately USD 28 trillion, published a new document last month advocating the maintenance of ownership structures based on the “one share one vote” principle. The initiative reinforces another similar viewpoint statement issued in April 2015 and is a result of a “wave” identified by its members as to differential ownership structures, despite empirical evidences and the institutional investors’ view in favor of the traditional structure.
According to ICGN, “the tactic of employing differential voting rights or loyalty shares has the potential to do more harm than good.” The document also says that “companies need to build trust, particularly amongst their minority investor base, that the rights of all shareholders are respected and that controlling shareholders do not exercise a disproportionate or undue influence in ways that might work against the interests of minority shareholders or the long-term success of the company.”
In a survey carried out with ICGN’s members in 2016, 84% of respondents said to be contrary to structures that are not based on the one share one vote principle, and 67% said that differential voting and control structures negatively impact the companies’ stock valuation. Additionally, 22% of the members stated that they would not invest in companies with multiple share classes.