93 S. Cal. L. Rev. Postscript 1 (2019)

handle is hein.journals/pstscrpt93 and id is 1 raw text is: 










             THE UNDESIRABILITY OF

   MANDATORY TIME-BASED SUNSETS

   IN  DUAL CLASS SHARE STRUCTURES:

   A  REPLY TO BEBCHUK AND KASTIEL


                         BERNARD S.   SHARFMAN*


     In  a 2017  Virginia  Law   Review  article, The  Untenable  Case  for
Perpetual  Dual-Class  Stock,' Professors Lucian Bebchuk  and  Kobi Kastiel
argued  that time-based sunset provisions  (the forced unification of shares
into one  share structure with equal voting rights after a certain period of
time) should  be a mandatory  feature of dual class share structures (classes
of common   stock with unequal  voting rights). This article has recently been
used  as  authority by  the Council   of Institutional Investors (CII) to
petition to the NASDAQ Stock Market (NASDAQ) and the New York
Stock Exchange   (NYSE)   to amend  their listing standards.2 The requested
amendments   would  require companies  seeking  to go public with dual class
shares to include in their certificates of incorporation a time-based sunset
provision  that would  go into  effect no more  than  seven years  after the
initial public offering (IPO) unless minority shareholders vote to extend

    *.  Bernard S. Sharfman is chairman of the Main Street Investors Coalition Advisory Council,
an associate fellow of the R Street Institute, and a member of the Journal of Corporation Law's editorial
advisory board. Mr. Sharfman would like to thank Attorney David Berger and Professors John C.
Coates IV, Jill Fisch, and Benjamin Means for their helpful comments on the letters that serve as the
foundation for this Article. The opinions expressed here are the author's alone and do not represent the
opinions of the commentators or the official position of any organization that the author is associated
with.
    1.  Lucian A. Bebchuk & Kobi Kastiel, The Untenable Case for Perpetual Dual-Class Stock,
103 VA. L. REV. 585 (2017).
    2.  Letter from the Council of Institutional Inv'rs, to John Zecca, Senior Vice President, Gen.
Counsel North America and Chief Regulatory Officer, NASDAQ Stock Mkt. (Oct. 24, 2018),
https://www.cii.org/files/issues and advocacy/correspondence/2018/20181024%20NASDAQ%2OPetiti
on%20ono2OMulticlasso2OSunsetso20FINAL.pdf. The CII sent an identical letter to the NYSE.
Letter from Council of Institutional Inv'rs, to Elizabeth King, Chief Regulatory Officer, Intercontinental
Exch., Inc. (Oct. 24,  2018), https://www.cii.org/files/issues_and advocacy/correspondence/
2018/201810240%`20NYSE%/`20Petition%/o20on%/o2OMulticlass%/`20Sunsets%/o20FINAL.pdf.


1

What Is HeinOnline?

HeinOnline is a subscription-based resource containing nearly 2,700 academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline with pricing starting as low as $29.95

Access to this content requires a subscription. Please visit the following page to request a quote or trial:

Already a HeinOnline Subscriber?