Allowing dual class share structure companies in the Premium listing segment of the London Stock Exchange: appreciating international experiences and recognizing local conditions

Abstract

While ‘one share, one vote’ has been widely recognized as a bedrock principle of good corporate governance in protecting shareholders’ basic rights, some regulators consider this principle to be too inflexible to cater for investors with different risk appetites and issuers with different profiles. For example, entrepreneurs may wish to raise equity capital to finance some promising growth of their companies, but at the same time, they do not want to surrender too much control of their companies to those outsiders who may have different views on how to operate the companies. If all stock exchanges stick to the ‘one share, one vote’ principle, these entrepreneurs may prefer not to offer shares of their companies to the public and simply shelve those growth projects indefinitely until they can solicit sufficient funding from other sources. In this case, economies may suffer and investors may lose promising investment opportunities with handsome returns. Key points