In Focus

Wish, Affirm Holdings and Roblox Plan to Include Time-Based Sunsets with Dual-Class Structures

Three companies – Wish, Affirm Holdings and Roblox – plan to go public before the end of the year with time-based sunset provisions incorporated into their charters. These provisions set a predetermined date on which each company’s dual-class structure will automatically convert to a one share, one vote structure. Wish’s proposed dual-class structure will give Class A shareholders 1 vote per share and Class B shareholders 20 votes per share. In accordance with its sunset provision, Wish will convert its dual-class structure to one share, one vote on the seventh anniversary of its initial public offering. Affirm Holdings will grant Class A shareholders 1 vote per share and Class B shareholders 15 votes per share. Like Wish, Affirm plans to go public with a 7-year sunset in place. Roblox plans to give Class A shareholders 1 vote per share and Class B shareholders 20 votes per share. Roblox will go public with a 15-year sunset in place. A full list of companies with time-based sunsets can be found here.

CII Sends Joint Letter Urging SEC to Require Disclosure of Trading and Research Costs

CII, with the CFA Institute and Healthy Markets Association, sent a letter November 6 to the SEC criticizing the commission’s 646-page Fund Disclosure Proposal, which would dramatically revise the information that open-end funds provide to investors, as well as the form and timing of those disclosures.
The three groups had urged SEC Chair Jay Clayton in June 2019 to require disclosures related to trading and research costs, but the agency did not adopt those reforms in the fund disclosure proposal. “The commission’s failure to adopt clear disclosure requirements regarding transaction costs means that most investors don’t know how much they are paying for trading or research, nor do they have the comfort that the research for which they are paying benefits them,” the recent letter says.

CII Opposes Super-Voting Shares at Brazilian Companies

CII sent a letter to the Brazilian Securities Commission (CVM) and the Brazilian Stock Exchange (B3) November 9  opposing proposed legislation that would permit super-voting shares.
While Brazilian corporate law currently allows companies to issue non-voting preferred shares, a Working Group within the Ministry of Economy is exploring amendments to permit super-voting shares. CII expressed concern with any expansion of dual-class shares in Brazil, but urged the CVM to adopt a mandatory sunset of no more than seven years, as well as other safeguards to mitigate risks, if Brazil permits super-voting shares. The Associação de Investidores no Mercado de Capitals (AMEC), a leading institutional investor organization in Brazil, submitted a detailed letter in September opposing the draft legislation. CII supported AMEC’s letter, which also called for safeguards including a seven-year sunset.

CII and Eight Members File Amicus Asking Court to Throw Out Proxy Advisor Rules

The proxy advisor rules that that SEC approved July 22 put at serious and unwarranted risk the continued availability of timely, high-quality, and independent advice and analysis of issues subject to shareholder votes, argues an amicus brief filed October 12 in the D.C. District Court by CII and eight of its members. The amicus supports a lawsuit that Institutional Shareholder Services filed last October challenging the rules. CII and its members assert in the amicus that there is no legal or economic basis for the commission to classify proxy advisors as proxy solicitors, which makes them subject to onerous filing rules. Furthermore, the conditions that advisors have to meet to qualify for an exemption from those rules impair their independence and harm investors, it says. CII was joined by CalPERS, CalSTRS, the California State Controller, CFA Institute, Colorado Public Employees’ Retirement Association (PERA), the New York City Comptroller, the CtW Investment Group, and Los Angeles County Employees Retirement Association in filing the amicus.