Major pension funds push for clearer voting disclosure for dual-class shares

The Governance for Growth Investor Campaign (GGIC) has launched an industry working group to develop guidance on how companies with dual-class share structures (DCSS) should disclose shareholder voting results.

Established with the International Corporate Governance Network (ICGN), the initiative aims to improve transparency around share structures that give certain shareholders greater voting rights than others.

The working group brings together representatives from across the investment chain, including GGIC, ICGN, the Council of Institutional Investors, the Investor Coalition for Equal Votes, the Chartered Governance Institute UK & Ireland, the Florida State Board of Administration, Railpen and Nest. The Investor and Issuer Forum will participate as an observer.

The group will be chaired by Caroline Escott, chair of the GGIC and head of investment stewardship and co-head of sustainable ownership at Railpen. Jen Sisson, chief executive officer of the ICGN, will serve as vice chair.

Speaking to IPE, Escott said: “Dual-class share structures are an increasingly global issue, with recent policy initiatives in the UK and elsewhere further enabling unequal voting rights approaches. How shareholders have voted on core issues at company AGMs is important information for both companies and investors. Yet, voting outcomes are generally aggregated for all share classes, making it impossible to understand the perspective of the wider shareholder base.”

The initiative follows the Financial Conduct Authority’s 2024 listing rules reforms, which made it easier for companies listing in the UK to adopt DCSS.

Rather than reporting a single aggregated voting result, the working group is calling for companies to disclose voting outcomes separately for each share class. It argues this would enable investors to distinguish between the views of ordinary shareholders and those of founders or insiders with enhanced voting rights.

Launched last year, the GGIC seeks to place good corporate governance at the heart of the UK’s economic growth strategy. Its members include the Church of England Pensions Board, People’s Pension, Brightwell and Railpen.

Last December, the campaign expanded its support base with organisations including Pensions UK, the Principles for Responsible Investment (PRI) and the UK Sustainable Investment and Finance Association (UKSIF).

The initiative comes amid an ongoing debate over how to balance efforts to make UK capital markets more attractive to listed companies with the need to protect shareholder rights. While policymakers have relaxed listing rules to boost London’s competitiveness, many institutional investors have argued that governance standards should not be diluted.

The working group’s proposal seeks to improve transparency within the existing framework by giving investors greater visibility into whether voting outcomes reflect the preferences of the wider shareholder base or are driven by holders of enhanced voting rights.