Indices to Bar New Issuers That Offer Multiple Share Classes
In response to the recent SNAP, Inc. IPO that issued shares to investors with little to no voting rights the S&P Dow Jones Indices and FTSE Russell have announced the will exclude companies that deny shareholders a say in how a company is run.
“This is a huge win for investors and a blow to companies that deny shareholders any say in how the company is run,” according to a statement from Ken Bertsch, executive director of the Council of Institutional Investors.
“Multi-class structures, especially those with non-voting shares, rob shareholders of the power to press for change when something goes wrong, which happens sooner or later at most if not all companies,” Bertsch said. “Shareholders at such companies have no say in electing the directors who are supposed to oversee management.”
This has little effect for microcaps (many of which have such share structures) because most aren’t included in these traditional indices.
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