SEC to Hold Investor Advisory Committee Meeting on Thursday, March 9

The next scheduled meeting of the Securities and Exchange Commission’s Investor Advisory Committee (IAC) will be held at the SEC offices in Washington, D.C. on Thursday, March 9 from 9:00 a.m. to 11:55 a.m. The meeting is open to the public and live streamed on the SEC website.

The agenda for the IAC meeting includes remarks from the two current Commissioners (Republican interim chairman Michael Piwowar and Democrat Kara Stein), followed by (i) a discussion regarding SEC investor research initiatives, the FINRA 2016 Financial Capability Study, and academic research on financial literacy, and (ii) a discussion regarding unequal voting rights of common stock.

The second panel discussion is intended to put a spotlight on growing shareholder concerns around non-voting share and dual class voting structures. This discussion comes as a growing number of high-profile companies, particularly those in the technology sector, in recent years have conducted IPOs on U.S. exchanges giving founders and insiders control of a majority of the votes and leaving the public shareholder base with little or no control over the company’s directors or future.

Participants will include the executive director of the Council of Institutional Investors and a member of a well-known Silicon Valley law firm who specializes in corporate governance and activism. It is expected that they will take note of Snap Inc.’s recent IPO in which only non-voting shares were sold to the public and, as a result, Snap will not be required to issue a proxy statement to shareholders or be subject to annual “say on pay” votes of investors, and shareholders will not have an ability to nominate directors.

According to press reports, various shareholder groups are also urging national securities exchanges and major indices to amend their rules to prohibit listings of companies with non-voting shares if they do not have a phase-out provision for the non-voting shares embedded in their structures.

It is unclear whether the IAC will issue a formal recommendation to the SEC to limit non-voting share or dual class voting structures. It is also unclear where the Trump administration’s pick for SEC chairman, Jay Clayton, stands on the issue.

Postscript to Dual-Class Shareholder Voting Rights  by Spencer G. Feldman

IPOs in 2016 Increasingly Include Dual-Class Shareholder Voting Rights by Spencer G. Feldman

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