Equal Protection in Shareholder Voting Rights: The One Common Share, One Vote Controversy
![handle is hein.journals/gwlr54 and id is 697 raw text is: Equal Protection in Shareholder
Voting Rights: The One Common Share,
One Vote Controversy
Joel Seligman*
Few takeover defenses are more likely to be successful than
dual class capitalization.' In a typical dual class capitalization, in-
siders receive common stock with multiple votes per share; public
stockholders receive shares with one vote per share. Dual class
capitalization thus permits the insiders to control a majority of the
votes of a corporation while owning a small minority of its stock.
With a majority of votes in hand, their corporation will not be a
takeover target.
Since 1926, dual class capitalization has been impermissible for
corporations listed on the New York Stock Exchange (NYSE),2
Copyright 0 1987 by Joel Seligman.
* Professor of Law, George Washington University National Law Center; Visit-
ing Professor, 1986-1987, University of Michigan Law School. B.A. 1971, University of
California, Los Angeles; J.D. 1974, Harvard University. A different version of this
Article was prepared for a November 1985 Conference on Takeover Transactions at
the Center for Law and Economic Studies, Columbia Law School. This version will be
published by Oxford University Press in a book to be edited by John C. Coffee, Jr.,
Louis Lowenstein, and Susan Rose-Ackerman. I am grateful to Harvey J. Goldschmid
and Alfred Conard for their useful comments.
1. Comparatively little has been published to date concerning dual class capital-
ization, or Class A-Class B capital structures. See, eg., Impact of Corporate Takeovers:
Hearings Before the Subcomm. on Securities of the Senate Comm. on Banking, Hous-
ing and Urban Affairs, 99th Cong., 1st Sess. 1110-234 (1985) [hereinafter Corporate
Takeovers Hearings]; D. FISCHEL, ORGANIZED EXCHANGES AND THE REGuLATION OF
DUAL CLASS COMMON STOCK (1986); Karmel, The SEC's Power to Regulate Stock-
holder Voting Rights, N.Y.L.J., Aug. 21, 1986, at 1, col. 1.
2. See in fra text accompanying notes 18, 68-70 & 74-75.
August 1986 Vol. 54 No. 5
687](ViewImageLocal?handle=hein.journals/gwlr54&div=36&collection=&method=preview&ext=.png&size=3)
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Equal Protection in Shareholder Voting Rights: The One Common Share, One Vote Controversy
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