Better rules needed for companies with shareholder-unfriendly structures

Author: Amélie Labbé | Published: 24 Jul 2018

A growing number of investors are calling on companies that have adopted shareholder-unfriendly structures to improve their corporate governance framework. Unequal voting rights, the likes of which have been seen in a number of technology companies that have gone public in recent months, have received most of the criticism.

"Of course, you need to give visionary entrepreneurs running room so they can act in the long-term but markets are short-term and managers need to be held accountable if they make a mistake," said Ken Bertsch, the Council of Institutional Investors’ (CII) executive director, adding however that no-vote shares have no place in public companies.

"This is why we are calling for limitations to this, by introducing time-based sunsets on exceptions to the one share, one vote principle," he said.

A number of countries including Germany, the US and South Korea have authorised companies to operate with structures that aren’t popular...