3 ms·

Can I buy shareholder voting rights separately from the actual money value of the shares? Or do a massive leveraged buy of shares just before the vote, then se

Can I buy shareholder voting rights separately from the actual money value of the shares? Or do a massive leveraged buy of shares just before the vote, then sell afterwards. Obviously if I do this and force a shareholder decision not good for company profits, the share price would be lower when I sell and I'd lose a lot of money.

meheleventyone 3y ago
You’d also have to find enough shares to buy and it’d basically be a hostile takeover.
deleted 3y ago
[deleted]
arcticbull 3y ago
Ideally the company has a dual-class structure where one class of share has more voting rights than the other - and you find someone who will sell them to you. This will significantly reduce your capital risk. A dual-class structure is how some founders (like Zucc) retain majority control of the company despite a minority beneficial ownership stake. You could probably also talk people into nominating you as their proxy at the shareholder vote.
- fakedang 3y ago
  It's not possible to split into that structure post-IPO though - it's illegal. Most old companies haven't got that kind of share class separation.
  - londons_explore 3y ago
    You could theoretically, with shareholder approval, take a company private, split the share classes, and then IPO again and resell the shares to the same people. In the interim while private, some bank would be the 100% owner, with some contract saying they must re-IPO within 24 hours and resell shares for 1 cent to the original list of shareholders. And I don't see any reason you couldn't do all this on one day - you just need approval of 51% of the shareholders and the board.
    - fakedang 3y ago
      > And I don't see any reason you couldn't do all this on one day - you just need approval of 51% of the shareholders and the board. Because filing for re-IPO is a very complicated affair in itself? Though the rest of it is fairly correct - it is basically the PE playbook.
vasco 3y ago
Easier to campaign for other shareholders to vote for your proposal in advance. It can be like a political campaign, it's just rare for people to try it, but nothing stops you from convincing other shareholders of voting for your resolutions well in advance of the meeting.
- cm2187 3y ago
  But in this case the activism is explicitly about hurting the company financially. 1) it is unlikely that you convince other shareholders to vote against their interest 2) the board and management have a fiduciary to their shareholders, including the ones who do not vote (which is often the majority of shareholders, how often did you show up at the general assembly of a stock you own in your portfolio, or a stock held in an ETF which typically do not vote). I suspect this is what the Exxon lawsuit will argue.
drpossum 3y ago
The dual structure of shares was mentioned, but, let's say there's not "non voting shares". "Can I buy shareholder voting rights separately from the actual money value of the shares?": Buying shareholder voting rights is the actual money value of the shares.
- growse 3y ago
  If that were true, non-voting shares would be worthless. The value also includes a future claim on the company's assets and cash flows.
  - cm2187 3y ago
    Also that's kind of a dodgy silicon valley corporate structure, you don't typically find that in blue chip companies.
    - dragonwriter 3y ago
      Preferred stock, usually with reduced or no voting rights, is very much older than Silicon Valley.
  - drpossum 3y ago
    Yes, it was qualified with "let's say non-voting shares don't exist" for a reason.
- lambertsimnel 3y ago
  Don't mutual funds separate voting rights from beneficial ownership? So maybe one way to gather voting rights for other people's shares would be to run a mutual fund. Shares can also be borrowed (for a fee) for the purpose of short selling, but maybe they could also be borrowed for their voting rights.

meheleventyone 3y ago

You’d also have to find enough shares to buy and it’d basically be a hostile takeover.

deleted 3y ago

[deleted]

arcticbull 3y ago

Ideally the company has a dual-class structure where one class of share has more voting rights than the other - and you find someone who will sell them to you. This will significantly reduce your capital risk. A dual-class structure is how some founders (like Zucc) retain majority control of the company despite a minority beneficial ownership stake. You could probably also talk people into nominating you as their proxy at the shareholder vote.

fakedang 3y ago
It's not possible to split into that structure post-IPO though - it's illegal. Most old companies haven't got that kind of share class separation.
- londons_explore 3y ago
  You could theoretically, with shareholder approval, take a company private, split the share classes, and then IPO again and resell the shares to the same people. In the interim while private, some bank would be the 100% owner, with some contract saying they must re-IPO within 24 hours and resell shares for 1 cent to the original list of shareholders. And I don't see any reason you couldn't do all this on one day - you just need approval of 51% of the shareholders and the board.
  - fakedang 3y ago
    > And I don't see any reason you couldn't do all this on one day - you just need approval of 51% of the shareholders and the board. Because filing for re-IPO is a very complicated affair in itself? Though the rest of it is fairly correct - it is basically the PE playbook.

vasco 3y ago

Easier to campaign for other shareholders to vote for your proposal in advance. It can be like a political campaign, it's just rare for people to try it, but nothing stops you from convincing other shareholders of voting for your resolutions well in advance of the meeting.

cm2187 3y ago
But in this case the activism is explicitly about hurting the company financially. 1) it is unlikely that you convince other shareholders to vote against their interest 2) the board and management have a fiduciary to their shareholders, including the ones who do not vote (which is often the majority of shareholders, how often did you show up at the general assembly of a stock you own in your portfolio, or a stock held in an ETF which typically do not vote). I suspect this is what the Exxon lawsuit will argue.

drpossum 3y ago

The dual structure of shares was mentioned, but, let's say there's not "non voting shares". "Can I buy shareholder voting rights separately from the actual money value of the shares?": Buying shareholder voting rights is the actual money value of the shares.

growse 3y ago
If that were true, non-voting shares would be worthless. The value also includes a future claim on the company's assets and cash flows.
- cm2187 3y ago
  Also that's kind of a dodgy silicon valley corporate structure, you don't typically find that in blue chip companies.
  - dragonwriter 3y ago
    Preferred stock, usually with reduced or no voting rights, is very much older than Silicon Valley.
- drpossum 3y ago
  Yes, it was qualified with "let's say non-voting shares don't exist" for a reason.
lambertsimnel 3y ago
Don't mutual funds separate voting rights from beneficial ownership? So maybe one way to gather voting rights for other people's shares would be to run a mutual fund. Shares can also be borrowed (for a fee) for the purpose of short selling, but maybe they could also be borrowed for their voting rights.