The Investor Coalition for Equal Votes (ICEV) has published a report uncovering the voting sanctions imposed by some of the world’s largest investors on companies that list with unequal voting rights to help investors navigate the ongoing dilution of shareholder and voting rights.
The coalition of global investors, which manages assets of over $4trn on behalf of tens of millions of savers, was co-founded in 2022 by Railpen and the Council of Institutional Investors (CII) in the US.
The report — Voting on voting rights: How the world’s largest investors sanction companies with unequal voting rights — brings together the voting policies of asset managers and asset owners from around the world on dual-class share structures (DCSS).
The companies mentioned in the report include BlackRock, BNP Paribas Asset Management, California Public Employees’ Retirement System, California State Teachers’ Retirement System, CPP Investments, DWS, Ethos Foundation, Fidelity International, Government Pension Investment Fund, and many others.
ICEV said the report provides “useful” information and insights both to investors who are thinking about their own voting policies for 2025 and beyond, as well as to pre-IPO companies that are interested in understanding the implications for their relationships with institutional investors should they list with unequal voting rights.
Some of the key voting sanctions highlighted by the report include:
- votes against directors at the company with unequal voting rights;
- votes against ‘dual-class enabling’ directors at all companies where they hold a board seat;
- votes in favour of relevant shareholder proposals;
- votes against capital resolutions at companies with DCSS.
The report builds on ICEV’s engagements with pre-IPO companies and their advisers, to encourage them to list with one share, one vote arrangements.
The Coalition has also been engaging with policymakers in the UK, US and European Union to try to discourage the rolling back of equal voting rights and highlight the evidence that demonstrates that robust investor protections are vital for healthy capital markets.
Caroline Escott, ICEV’s chair, said: “As policymakers around the world roll back investor protections, it’s vital that independent shareholders think about how to most effectively wield the available stewardship tools to ensure their voice as the owners of capital is heard.”
Escott added that the nature of unequal voting rights means that shareholder voting sanctions are less impactful than they otherwise would be. However, she said ICEV encourages investors to be creative around how they use their vote and to continue to use this tool as a public expression of their concerns around unequal voting rights – as they would on any other issue that matters to financial outcomes for their beneficiaries and clients.
“We hope that this report is a useful guide for investors who are considering how to navigate the ongoing dilution on shareholder and voting rights. The report also offers invaluable insights for companies into the concerns of some of their largest current and potential shareholders around the use of unequal voting rights without a suitable time-based sunset clause,” she noted.
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