London Allowing Dual Class Premium Listings: A Swedish Commentary

Abstract

In the UK Listing Review it is suggested that the London Stock Exchange should allow companies with dual class share (DCS) structures with differentiated voting rights to list on the Premium segment. In this paper, we discuss this proposal. First, we present an overview of the DCS-debate together with the proposition in the Hill Review to allow for DCS-listings under certain conditions. Second, we discuss the arguments that are made against DCS-listings. For the sake of comparison and reference, we then give an overview of the Swedish DCS-regulation and the political economy. From there, we discuss the conditions for DCS-listing recommended in the Hill Review. Our conclusion is that several of the DCS-listing conditions suggested might not only hinder DCS-structures from being useful for companies that wish to utilize such structures but would in several cases disable the corporate governance mechanisms that would otherwise counteract several of the problems that DCS-structures can give rise to, most prominently the market for corporate control.

Keywords: Dual Class Shares, Multiple Voting Shares, UK Listing Review, Swedish Corporate Governance

JEL Classification: G30, G32, G34, G38, K20, K22