Founders without Limits: Dual-Class Stock and the Premium Tier of the London Stock Exchange

by Bobby V. Reddy

Overview

Big Tech has flourished on the US public markets in recent years with numerous blue-chip IPOs, from Google and Facebook, to new kids on the block such as Snap, Zoom, and Airbnb. A key trend is the burgeoning use of dual-class stock. Dual-class stock enables founders to divest of equity and generate finance for growth through an IPO, without losing the control they desire to pursue their long-term, market-disrupting visions. Bobby Reddy scrutinises the global history of dual-class stock, evaluates the conceptual and empirical evidence on dual-class stock, and assesses the approach of the London Stock Exchange and ongoing UK regulatory reforms to dual-class stock. A policy roadmap is presented that optimally supports the adoption of dual-class stock while still protecting against its potential abuses, which will more effectively attract high-growth, innovative companies to the UK equity markets, boost the economy, and unleash the true potential of 'founders without limits'.

Product Details

ISBN-13:	9781108970624
Publisher:	Cambridge University Press
Publication date:	04/18/2024
Series:	International Corporate Law and Financial Market Regulation
Pages:	485
Product dimensions:	6.00(w) x 1.25(h) x 9.00(d)

About the Author

Bobby Reddy teaches Company Law and Corporate Governance at the University of Cambridge, and is a Fellow of the Cambridge Endowment for Research in Finance and a Fellow of Churchill College. He is a former corporate partner at the global law firm Latham & Watkins LLP and was a director and trustee of the charitable corporate governance think-tank Tomorrow's Company.

Table of Contents

Introduction: 1. The cult of dual-class stock in the era of big tech; 2. A tale of two cities and beyond; 3. First among equals? Other methods of creating a divergence between voting and cash-flow rights; 4. Shareholder democracy, and corporate purpose; 5. From controlling shareholders to dual-class stock; 6. Theoretical benefits and detriments of dual-class stock; 7. The empirical evidence on dual-class stock; 8. The existing constraints; 9. A balanced protection package for inferior-voting shareholders; Epilogue; Appendix: The proposed enhanced inferior-voting shareholder protection package for the UK's premium-tier with a comparison to other major dual-class stock exchanges; Index.

Editorial Reviews

'Founders Without Limits is likely to be the definitive work on dual class shares for a generation. It is a superb contribution, written with clarity and wit, which is directly relevant for all public stock markets around the world, at a time when dual class structures are firmly in the policy spotlight.' James Palmer, Partner, Corporate Lawyer and former Chair, Herbert Smith Freehills

'Bobby Reddy’s Founders Without Limits offers the definitive treatment of an issue that will do much to define the public company’s role in Britain’s corporate economy for decades to come. A thorough treatment of the relevant empirical and comparative evidence provides the platform for timely and persuasive policy recommendations.' Brian Cheffins, S. J. Berwin Professor of Corporate Law, University of Cambridge

'This is a refreshing book. It transcends the rigid thinking that is often evident in the debate about dual class shares. It displays a sophisticated understanding of the motivations of company founders and the nature of company ownership. Bobby Reddy combines an academic’s rigour with a practitioner’s common sense and a teacher’s flair for memorable illustration.' Mark Goyder, Founder of Tomorrow’s Company

'Dual-class stock listings of companies are becoming increasingly more attractive to their stakeholders. Bobby Reddy’s book is the authoritative exposition of the legal and regulatory development of dual-class stock listings in the US, the UK and around the world. It is an invaluable reference guide for students, academics and practitioners alike.' Dr Guy O’Keefe, Partner, Slaughter and May

From the Publisher