Views on improving the integrity of global capital markets
17 March 2017

CorpGov Roundup: Hot Topic is Whether Dual Class Shares Should Be Allowed

There’s never a shortage of news in the corporate governance world. Canada released protocols for reconciling meeting votes, and Germany published updates to its corporate governance code. The Mexican Stock Exchange took steps to help push Mexican companies improve their governance after a group of asset managers called for increasing the notification period for shareholder meetings. A call was put out for the Middle East and North Africa region to improve corporate governance to capitalize on interest from institutional investors. Finally, dual class shares are on the radar in Singapore and the United Kingdom.


The Canadian Securities Administrators (CSA) recently published meeting vote reconciliation protocols meant to ensure that voting at Canadian companies is as secure as possible.

Meeting vote reconciliation consists of the processes used to tabulate proxy votes for shares held through intermediaries. It involves systems and processes that link depositories, intermediaries, and meeting tabulators with one another in order for proxy votes from registered shareholders and voting instructions from beneficial owners to be reconciled against securities entitlements.

The protocols contain CSA staff

  • expectations on the roles and responsibilities of the key entities that implement meeting vote reconciliation, and
  • guidance on the kinds of operational processes that they should implement to support accurate, reliable and accountable meeting vote reconciliation.

The protocols address the following areas:

  • Generating and sending vote entitlement information
  • Setting up vote entitlement accounts
  • Sending proxy vote information and tabulating and recording proxy votes
  • Informing beneficial owners of rejected/pro-rated votes


On 14 February, the German Corporate Governance Commission published changes to the German corporate governance code. The changes were made to enhance transparency for stakeholders who want to assess corporate governance and to comply with international best practices for listed companies. The improvements in transparency include more information being required regarding the criteria for the composition of the supervisory board; specifically, the qualifications of board members. Companies must also disclose more information about director independence by naming the board members that are considered independent instead of simply saying what percentage of the board is independent.

The Commission also urged that the chair persons of the supervisory boards engage with shareowners on topics relevant to the board.


We talked last month about efforts by a number of investors — led by Cartica Capital — to push Mexican companies to make governance changes. Late in February, Cartica announced that the Mexican Stock Exchange (BMV) had addressed some of Cartica’s concerns and made a recommendation that issuers extend notice periods for shareholders meetings. BMV now recommends that all issuers provide more than the statutory minimum 15-day notice for annual meetings of shareholders.  BMV’s communication noted that the recommendation was made after consultation with the National Banking and Securities Commission (CNBV) and cited Cartica’s request that issuers make notices and all supporting materials available electronically at least 30 days in advance of any shareholders’ meeting.

BMV did not address Cartica’s other request that the exchange rescind charter provisions that require board approval for a shareholder to acquire 10% of the voting shares and exercise his or her statutory right to nominate a director to the board.

Middle East and North Africa

A recent paper discussing the role of institutional investors in corporate governance in the Middle East and North Africa cites an increased interest from global institutional investors as a potential impetus for improving corporate governance standards in the region. The paper argues that companies in the region should embrace international best practices for corporate governance to capitalize on this increased interest over the long term.


The Singapore Exchange (SGX) is currently consulting the public on whether it should allow companies that list on the exchange to adopt dual class share structures, and if so, what governance safeguards should be put in place.

A dual class share structure gives certain shareholders voting power or other related rights that are disproportionate to their shareholding. Shares in one class carry one vote, whereas shares in another class carry multiple votes.

CFA Institute endorses a one-share, one-vote standard. We believe that multiple voting shares often tend to disenfranchise shareowners.

United Kingdom

The Financial Conduct Authority (FCA) in the United Kingdom recently published a discussion paper on the effectiveness of the UK primary capital markets.

The FCA is interested in views on the following:

  • Whether the current boundary between the standard and premium listing categories is appropriate, particularly in relation to overseas issuers and exchange-traded funds, and looking more broadly at the role that standard listing plays in practice.
  • The effectiveness of the UK primary equity markets in providing capital for growth, particularly for early stage science and technology companies.
  • Whether there is a role for a UK primary debt multilateral trading facility and its potential structure.
  • Measures that could be introduced to support greater retail participation in debt markets.

The paper has received a lot of attention because it introduces the possibility of the UK capital markets being opened up to companies with dual class share structures. The paper proposes the possibility of creating a new international segment for mature international companies. The argument is that such a segment would allow management at these companies “to focus more on long-term performance and less on short-term market pressures.”

Concerned parties are asked to respond with comments by 14 May.

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About the Author(s)
Matt Orsagh, CFA, CIPM

Matt Orsagh, CFA, CIPM, is a senior director of capital markets policy at CFA Institute, where he focuses on corporate governance, ESG, and climate change analysis. He writes and speaks frequently on these topics on behalf of CFA Institute. His paper, Climate Change Analysis in the Investment Process was named “Best ESG Paper” by Savvy Investor in 2021.

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