The Investor Coalition for Equal Votes (ICEV), a group of global asset owners managing assets of over $1trn on behalf of nearly five and a half million savers, is supporting the Financial Conduct Authority (FCA)’s proposals to maintain current premium listing protections around Dual Class Share Structures (DCSS) in any move to a single segment regime.
The coalition – of which Railpen and the Council of Institutional Investors (CII) are founding members – was created to fight against unequal voting rights at portfolio companies, to protect investors and help them be effective stewards of capital.
ICEV believes a “one share, one vote” listing requirement provides better investor protection on capital structure.
In its response to the FCA’s DP 22/2: Primary Markets Effectiveness Review Discussion Paper, ICEV cited evidence that capital structures providing disproportionate voting rights to founders and other insiders could cause long-term performance issues.
The coalition said that the UK’s unique selling proposition as a destination for global capital “is in large part the robust investor protections and historically high standards of corporate governance”, calling for the Premium Listing Principles, including the current limits on use of DCSS, to apply to all issuers of equity shares under any single segment regime.
Caroline Escott, ICEV chair and senior investment manager at Railpen, said: “We are pleased that the FCA is minded to maintain existing premium listing protections around DCSS in any move to a single regime, so that shareholders can effectively hold companies to account.
“Active investor stewardship and ensuring shareholders have a voice in proportion to their economic ownership is vital to achieving good investor outcomes and ensuring the UK remains a trusted hub for global capital.”
Research shows, Escott said, that benefits of holding dual-class stock can decline over time and, over the long term, companies with dual-class shares tend to be undervalued when compared with peers.
“The UK must continue to uphold robust investor protections and high standards of corporate governance to create and maintain long-term sustainable performance,” she added.