Book contents
- Founders without Limits
- Cambridge University Press
- Founders without Limits
- Copyright page
- Contents
- Figures
- Tables
- Preface
- Acknowledgements
- Table of Cases
- Table of Legislation and Regulation
- Abbreviations
- Introduction
- Part I Putting Dual-Class Stock into Context
- 1 The Cult of Dual-Class Stock in the Era of Big Tech
- 2 A Tale of Two Cities and Beyond
- 3 First among Equals?
- 4 Shareholder Democracy and Corporate Purpose
- Part II Evaluating Dual-Class Stock
- Part III Formulating a Policy on Dual-Class Stock
- Appendix Comparison of Inferior-Voting Shareholder Protections on Major Dual-Class Stock Exchanges
- Index
3 - First among Equals?
Other Methods of Creating a Divergence between Voting and Cash-Flow Rights
from Part I - Putting Dual-Class Stock into Context
Published online by Cambridge University Press: 29 October 2021
- Founders without Limits
- Cambridge University Press
- Founders without Limits
- Copyright page
- Contents
- Figures
- Tables
- Preface
- Acknowledgements
- Table of Cases
- Table of Legislation and Regulation
- Abbreviations
- Introduction
- Part I Putting Dual-Class Stock into Context
- 1 The Cult of Dual-Class Stock in the Era of Big Tech
- 2 A Tale of Two Cities and Beyond
- 3 First among Equals?
- 4 Shareholder Democracy and Corporate Purpose
- Part II Evaluating Dual-Class Stock
- Part III Formulating a Policy on Dual-Class Stock
- Appendix Comparison of Inferior-Voting Shareholder Protections on Major Dual-Class Stock Exchanges
- Index
Summary
Dual-class stock is not the only method by which a founder can create a divergence between control and cash-flow rights in a company.Other solutions, known as ‘control-enhancing mechanisms’, such as board appointment rights, pyramid structures, cross-ownership structures, shareholders’ agreements, derivative instruments, preference shares and loyalty shares, could, on their face, create similar dynamics to dual-class stock.However, those control-enhancing mechanisms entail compromises that make them unpalatable to a founder specifically seeking to list his or her firm, divest of equity and retain control.Additionally, many of those control-enhancing mechanisms would arguably not be permitted for a premium tier company.Dual-class stock presents numerous benefits to a founder over other control-enhancing mechanisms, making them, even if they are permitted on the premium-tier, inadequate substitutes.Furthermore, if dual-class stocks were permitted on the premium tier, it is unlikely that this would result in an influx of other control-enhancing structures, since founders are unlikely to choose them over dual-class stock given the practicalities in using them to create the necessary divergence between control and cash-flow rights.In any case, certain control-enhancing mechanisms are more opaque than dual-class stock structure, and, therefore, the regulators should take a stricter approach to their utilisation than dual-class stock.
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- Founders without LimitsDual-Class Stock and the Premium Tier of the London Stock Exchange, pp. 119 - 141Publisher: Cambridge University PressPrint publication year: 2021