CII Supports MSCI's New Approach to Dual-Class Listings, With Modifications

CII submitted a comment letter to MSCI May 9 on the index provider's consultation regarding the treatment of unequal voting structures. MSCI proposed in January to factor into each security the proportion of each constituent's total voting power in free float.
CII commends MSCI for its careful and thoughtful proposal.  The Council generally supports the proposed approach, but recommends that a company be exempt from weighting based on voting rights if it establishes a time-based sunset of no more than seven years, potentially renewable by vote of shareholders with inferior voting rights.
S&P Dow Jones no longer allows dual-class companies to join the S&P 1500 and component indexes. FTSE Russell excludes from its developed market indexes any company with a free float that constitutes less than 5% of total voting power, and has indicated its interest in revisiting that threshold.
Comments on the expanded consultation are due May 31. MSCI intends to announce any changes to its methodology by June 21.