Private equity firm Carlyle, apparently trying to do an end-run around the potential for class-action litigation as it prepares to go public, has ignited a debate about whether a company can require shareholders to use binding arbitration rather than class-action lawsuits to settle disputes.

The firm, which is preparing to conduct an initial public offering this spring, included in its Jan. 10 registration statement a provision mandating that all shareholder disputes be settled through arbitration, and that all arbitration be brought in an individual capacity; class-action arbitration would be prohibited.

Historically, the Securities and Exchange Commission has disliked the idea of ...