The review said any changes must come with certain conditions, including introducing investor protections such as sunset clauses, which put time frames on how long something such as a dual-class structure may operate.
While some welcome the changes with protections and provisions in place, many in the industry oppose the proposal.
“We discourage it and most of our members do as well,” said George S. Dallas, policy director at the International Corporate Governance Network in London.
The ICGN’s case on why dual-class structures are a bad idea begins with common sense. While stewardship codes aim to “empower investors and encourage them to be good and active stewards, the explicit purpose of dual-class structures is to water down (that ownership). It is regulatory schizophrenia — they want to give investors power, but not real power. That’s an issue,” Mr. Dallas said.
Caroline Escott, London-based senior investment manager, active ownership at RPMI Railpen, agreed that dual class structures “dilute market discipline and the ability of minority shareholders like Railpen properly…
