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Dual-Class Shares Are Coming Under Fire—Again

Class warfare erupts as markets and investors wrestle with shareholders' preferential voting rights.

Scan stock markets around the world, and you’d be forgiven for thinking democracy was under attack. The principle of one share, one vote has been around since companies started selling shares to the public in the early 17th century. Today its recurring nemesis—dual-class shares, which grant different classes of owners different voting rights—is back, big time. And exchanges that have shunned dual-class share listings are wrestling with an age-old dilemma: Should we or shouldn’t we?

For exchanges, the appeal of such listings is plain enough. Competitive pressures among stock markets are intense. Plus, there are some big technology listings on the horizon, including Dropbox and Mobvoi, an Alphabet-backed Chinese artificial intelligence startup. So Hong Kong, London, and Singapore are weighing whether, like some of their competitors in New York and elsewhere, they should list dual-class shares. “There is an air of inevitability around it,” says David Smith, Asia head of corporate governance at Aberdeen Standard Investments. “We are mindful of the risk of contagion. Once one regime allows it, others will surely follow.”