Multiple Voting: A Tool To Attract Investors?

One-share one-vote has long been the European Commission's mantra in establishing a level playing field for investors. The conventional wisdom was that a shareholder's influence should be aligned with their economic investment in and exposure to the company. But the success of the "FANG" stocks and the US governance model of giving ultimate control to founders while also selling shares and bringing in new investors has led to a rethink. In response, the European Commission recently proposed a draft directive on the issuance of shares with multiple voting rights in an IPO.

The idea is to make going public more attractive for privately held companies and founders by allowing the issuance of dual-class shares. New equity capital will be raised from outside investors who subscribe ordinary shares, while control via multiple voting rights remains with the equity-diluted founders as the "fittest leaders" with their unique skills, abilities and visions.