In its newly-posted, succinct position paper on differential voting rights and index inclusion, BlackRock - while reiterating its support for equal shareholder voting rights - sharply criticizes index providers for excluding companies from their broad market indices based on capital structure-related differential voting rights (which could limit its index clients' investment opportunities and associated returns) - arguing that this type of standard-setting is properly within the purview of policymakers - not index providers.
The position paper comes on the heels of recent decisions by the S&P Dow Jones and FTSE Russell, and MSCI's pending consultation, to exclude companies with differential voting rights from their broad market indices under enumerated circumstances, which we reported on here and here.
In lieu of broad market index exclusion and in the absence of relevant regulation or listing standards, BlackRock proposes that companies: (i) periodically (e.g., every 5 - 10 years) allow shareholders to affirm their capital structure's differential voting rights framework via a management proxy proposal, and (ii) for multi-class capital structure companies, subject particular actions that entail a potential conflict of interest (e.g., executive pay, RPTs) to a one share, one vote framework.
Vanguard reportedly has also opposed broad market index exclusion on the basis of differential voting rights.