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Exchanges say ‘no’ to non-voting shares

Joe Mont | August 4, 2017

The current wave of online upstarts going public is disrupting beyond their market segments. They are also upending traditional approaches to shareholders and corporate governance and resorting to increasingly complex share structures to offer greater flexibility to corporate founders and their managerial picks.

In March, Snap Inc., the parent company of Snapchat, moved forward with a $3.9 billion initial public offering. It immediately faced the wrath of investor advocates over the fact that only non-voting shares in the company were offered to investors.

Public shareholders of Class A common stock will have no say in the running of Snap. Co-founders Evan Spiegel, chief executive, and Bobby Murphy, chief technology officer, owned 44 percent of total outstanding shares in the company prior to the IPO. They will, however, continue to control more than 90 percent of all votes even if their ownership interest dilutes over time. Control of the company will only change... To get the full story, subscribe now.