Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Index provider MSCI delays decision on unequal voting rights stocks

Published 06/21/2018, 05:52 PM
Updated 06/21/2018, 06:00 PM
© Reuters. FILE PHOTO: Illustration photo of the MSCI logo

© Reuters. FILE PHOTO: Illustration photo of the MSCI logo

NEW YORK (Reuters) - Stock index provider MSCI said on Thursday it extended its review of how to treat stocks with unequal voting rights and expects to make a decision by the end of October.

That decision, which could affect dozens of stocks around the world, including technology heavyweights Facebook (NASDAQ:FB) and Google parent Alphabet (NASDAQ:GOOGL), had been expected by Thursday.

But MSCI said in a statement that it "determined that it is appropriate to give further consideration to the full breadth of views expressed by the investment community before announcing a final conclusion."

MSCI has been considering a plan to reduce the influence within its indexes of stocks that have share structures with unequal voting rights. Such a move could have resulted in portfolio managers selling their shares to rebalance their holdings.

More than $660 billion in passively managed funds track MSCI indexes around the world, according to Lipper data.

Uneven voting structures has been a hot corporate governance topic, especially as a number of newly listed U.S. technology firms, such as Snap Inc (NYSE:SNAP) and Dropbox Inc, have listed shares that retain lopsided decision-making power with insiders.

Last year, S&P Dow Jones Indices started excluding companies with multiple classes of shares from the S&P 500 and other indexes, although it did not apply the rule to existing index components, including Alphabet and Berkshire Hathaway Inc . (NYSE:BRKa)

FTSE Russell implemented a similar rule last July, requiring new constituents of its indexes to have at least 5 percent of their voting rights in the hands of public shareholders, while giving a five-year grace period to existing constituents that do not meet the threshold.

The MSCI proposal, made in January, has not been universally welcomed.

© Reuters. FILE PHOTO: Illustration photo of the MSCI logo

BlackRock Inc (NYSE:BLK), the world's largest asset manager, in April said securities regulators, not index providers, should set international standards for shareholder voting rights. It said MSCI's proposal could distort markets.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.