In a paper titled, “The Importance of Inferior Voting Rights in Dual-Class Firms,” author Dov Solomon focuses on companies with a class of non-voting stock. By offering non-voting stock to the public and listing that class of securities on a national securities exchange, an issuer is not subject to a number of disclosure and related securities law requirements that are tied to voting rights. For example, an issuer with non-voting stock is not subject to the proxy rules. Holders of the class of non-voting stock are not entitled to vote on matters that typically would be raised at stockholders’ meetings or to put forward stockholder proposals for consideration at such a meeting. An issuer with non-voting stock also would not be subject to Schedule 13D or 13G filings for that class of shares. Holders, including insiders, also would not be subject to Section 16 filing requirements. The author suggests that the Securities and Exchange Commission impose such disclosure and governance requirements on issuers with a class of non-voting stock.
