We reject all types of differentiated voting rights. In most cases they
serve to protect the interest of a dominant owner. This does not mean,
however, that we subscribe to the simplistic theory of 'one share, one vote'
that is currently so popular in corporate governance circles, academia and
politics. Super-voting shares are blatant discrimination and an abuse of
the privilege that limited and public company status provides.
The one share, one vote rule sounds more than reasonable for the
distribution of voting rights among shareholders. After all, what is seen as the best (or maybe least bad) system of
government in the political field, should also be the most appropriate form of
But even in politics this principle is only a rough guide to the
reality. Various intended and unintended checks and balances exist
and lead to a situation where the principle is undermined for good
The founding fathers of the US constitution
were deeply suspicious of
unfettered democracy and maybe shareholders would be better served if the
voting structure in public companies is designed as carefully as the
constitution of the United States.
We are certainly not in favour of giving groups of shareholders
(often founding families or other controlling owners) different
voting rights. But more research is necessary and may well lead to
the conclusion that the limitation of voting rights is well-suited
to force all stakeholders to focus on the long-term well-being of
MORE ON SHAREHOLDER VOTING
About Pro Governance
Our Mission is to
campaign for the protection of investors and savers by promoting
good corporate governance.
We also believe that the wider spread of share ownership is in
itself a public good and may sometimes even be preferable to higher
Shareholders in publicly listed companies are widely dispersed and cannot
micro-manage the affairs of the companies they are invested in. The
international nature of today's shareholder registers make this also
impossible for large institutional investors.
On the other hand, abuses that have developed over the past few years make
it imperative that company managements are supervised in a more efficient
Tax incentives and institutional constraints have favoured the growth of
large institutional investors at the expense of small individual
shareholders. This makes it more important than ever that these investors
behave like fiduciaries and have the interests of their clients at heart.
This means that the business of
money management cannot be treated like any other profit-maximising business.
Like the medical, legal or academic professions the interest of the clients
has to have priority when critical decisions have to be made with regard to
companies the money managers are invested in.
We at Pro-Gov think that the establishment of an effective international forum
combining representatives from the national organisations of individual
shareholders and investors will be an effective step in the direction of
improving corporate governance.
At the moment the corporate
Governance discussion is limited to academics, journalists in the quality
business press, institutional shareholders and companies and their business
associations as well as politicians. The one party missing on the table are
the real investors who - with some exceptions - voiceless in the debate.
isn't what's illegal; it's what's legal"