18 juin 2019

« Theory, Evidence, and Policy on Dual-Class Shares: A Country- Specific Response to a Global Debate »

Aurelio Gurrea-Martínez | Ibero-American Institute for Law and Finance

« Dual-class shares have become one of the most controversial issues in today´s capital markets and corporate governance debates around the world. Namely, it is not clear whether companies should be allowed to go public with dual-class shares and, if so, which restrictions (if any) should be imposed.

Three primary regulatory models have been adopted to deal with dual-class shares:

  • (i) prohibitions, existing in countries like the United Kingdom, Germany, Spain, Colombia, or Argentina;
  • (ii) the permissive model adopted in several jurisdictions, including Canada, Sweden, the Netherlands, and particularly the United States; and
  • (iii) the restrictive approach recently implemented in Hong Kong and Singapore.

This paper argues that, despite the global nature of this debate, regulators should be careful when analysing foreign studies and
approaches, since the optimal regulatory model to deal with dual-class shares will depend on a variety of local factors. It will be argued that, in countries with sophisticated markets and regulators, strong legal protection to minority investors, and low private benefits of control, regulators should allow companies going public with dual-class shares with no restrictions or minor regulatory intervention (e.g., eventbased sunset clauses). »

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Finally, collecting evidence from Canadian firms, other authors have shown that firms with dual-class shares outperform their peers over 5, 10, and 15 year periods (65). Moreover, they use of dual-class share structure may create other benefits for a local economy – especially in terms of protectionism, attraction of IPOs, and development of the financial industry. Therefore, it will make sense to allow dual-class share structures.

[ … ]

65 Yvan Allaire, Enough with the Shibboleth on Dual Class of Shares, Le MÉDAC (2016), pp 3 (available at


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