Investors should not be denied voting rights

THOSE WHO lend their money to companies quoted on the stock market expect not only to hear about the activities of their chosen firm and to share in its success but to also make decisions on its future.

Several entrepreneurs are riding roughshod over such a reasonable approach. They want the funds but deny shareholders a vote.

The most glaring examples are companies floated by technological gurus. They have constructed firms with multiple share classes, designed to deny investors any effective say in the running of their empires.

Whilst these high-tech pioneers seek funding, they want no saver to interfere. They appear to blatantly realise that investors will “ask no questions but the price of votes”, as Samuel Johnson quipped in Vanity of Human Wishes.

A good example is the Snapchat social media company, Snap, co-founded by tycoon Evan Spiegel. It obtained £2.7bn two years ago from new investors but despite stumping up so much money, not a single voting right has been issued.

Snap is aware of such a designed anomaly. It responds that giving savers votes would reduce the voting power of 29-year-old Spiegel. Of course, that would be the consequence but that is the cost if public investment is sought.

The stock exchanges that allow such disgraceful antics carry much of the blame. They should not tolerate this behaviour and have listing rules in place to stop such a cavalier approach.

Both the New York Stock Exchange and Nasdaq, both based in New York, are the two most capitalised stock exchanges in the world. They should not allow firms to seek money giving each saver votes in proportion to the money invested.

Fortunately, there are some bodies campaigning here for fairness. Legal & General has urged such a change. It rightly says that long-term investors are disadvantaged and such voting structures “treat shareholders inequitably”.