CII calls for legislation to enhance transparency of multi-class voting

April 11, 2025

The Council of Institutional Investors (CII) has called on the US House Committee on Financial Services to introduce legislation requiring class-by-class disclosure of vote results.

The CII has written to the committee, urging it to consider amending existing laws or introducing a standalone bill to enhance transparency in the voting results of multi-class companies.

In particular, the proposed Multi-Class Act would update the Securities Exchange Act of 1934 to require companies with multi-class stock structures to disclose certain information in their proxy or consent solicitation materials.

This would include details about the voting power of directors, director nominees, executive officers and anyone who holds 5% or more of the total voting power across all classes of stock that can vote in director elections.

In the letter, the CII stated that the principle of one share, one vote is a cornerstone of good corporate governance. While equal voting rights based on share ownership remain the most common capital structure, in the past two decades, a growing number of companies, including Google’s parent company Alphabet and Meta, have adopted dual- or even triple-class capital structures with unequal voting rights.

Typically, founders and insiders secure their control by issuing themselves a class of stock with 10 votes per share, while giving public shareholders a class with only one vote per share. Over time, this "founder-knows-best" approach can pose growing risks to long-term investors by entrenching management and causing executives to overlook the need for change.

The lack of accountability at the top can also negatively impact corporate culture and the wider community, as insiders with disproportionate voting power can act as they wish with little risk of losing their jobs, according to the CII.

Minerva’s blog focuses on the latest developments in ESG investing and stewardship. Minerva is a global provider of sustainable stewardship solutions with over 25 years of expertise. Minerva empowers investors by providing essential tools, including ESG research and data, enabling them to navigate the intricate landscape of stewardship and proxy voting, whilst ensuring their decisions are well-informed and aligned with sustainable principles.

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