Comments on: Facebook / Google –A whim and a prayer

By: Tatilsever

Tatilsever — Sat, 29 Mar 2014 01:03:03 +0000

They cannot litigate for not having the same voting rights per share, but they can file lawsuits if they can argue that some actions were to the detriment of the shareholders with less voting rights. Some will be settled as nuisance suits without any impact on decision making, especially if it comes to boneheaded acquisitions that hurt every shareholder, with or without extra voting power. Still, they act as a safety valve preventing any major decisions that would enrich the insiders while hurting the others. I am not sure if this is the case in other jurisdictions.

I still agree with you that it would be better to have every shareholder to have the same voting rights per share, but giving higher voting power to some could be even more detrimental outside the US.

By: windsorr

windsorr — Fri, 28 Mar 2014 10:03:34 +0000

I would disagree with that. Its a practice that has a place in private companies but not in public ones.

Shareholder litigation would likely fail as the classic defense is caveat emptor which is completely true in these cases

By: Tatilsever

Tatilsever — Thu, 27 Mar 2014 17:29:59 +0000

>”Many commentators are berating the Hong Kong exchange for being out of
> date but in fact the reverse is true.”
Amen!…

By the way, The Economist commented that giving different voting weight to different types of shares (i.e. insiders and founders) would be more dangerous in Hong Kong, whereas shareholder litigation somewhat balances the scales in the US.

By: Anish

Anish — Thu, 27 Mar 2014 06:46:26 +0000

Very very true !