Dual-class share structures, which give some stockholders more
voting power, are out of favor among investors, but popular with
fast-growing technology companies. U.S. investors have been
pushing companies to abandon the structure for years but have
stopped short of not investing in those firms.
The draft bill targets newly public companies, and would
grandfather in social media companies such as Facebook Inc and
Snapchat parent Snap Inc. The bill also allows for the
dual-class structure to remain in place for an additional seven
years if a majority of shareholders in each class approves it.
Shareholder advocacy group the Council of Institutional
Investors wrote to the committee on Friday in support of the
bill, along with the New York State Comptroller, which oversees
$268 billion in public pension money, and the Ohio Public
Employees Retirement System (OPERS), with $113 billion in assets
under management.
OPERS wrote in the letter that divesting from companies with
dual-class stock eliminates the "possibility of any constructive
dialogue" it could have with the firms.
The bill also calls for companies to disclose the racial and
ethnic diversity of their boards and executive officers. The
U.S. Securities and Exchange Commission is already planning to
implement a similar rule.
(Reporting by Jessica DiNapoli; Editing by Richard Chang)
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