MSCI blocks new stocks lacking voting rights from some indexes

From Reuters - November 3, 2017

NEW YORK (Reuters) - MSCI Inc will temporarily ban new companies that deny equal voting rights to shareholders from two market indexes, intensifying a debate over who should police perceived lapses in corporate governance.

The index provider will no longer add shares of stocks to its ACWI IMI and U.S. Investable Market 2500 Indexes if the company restricts which topics an investors can vote on or treats their vote as less valuable than those of a privileged insider, such as the companys founder.

The ban will apply until the index provider consults with investors on how and whether to apply a one share, one vote principle across its equity benchmarks. Stocks currently in the indexes will not be affected by the ban.

Snap Inc, which owns the messaging app Snapchat, made waves when it went public in a $3.4 billion offering in March with a class of common stock granting no voting rights, and it was later excluded from some market indexes.

But a move to ban Snap and companies like it from its benchmarks would put MSCI at odds with its biggest client, BlackRock Inc. The worlds largest asset manager with nearly $6 trillion, BlackRock offers funds that track indexes,and it has said that excluding companies could hurt its investors returns.

MSCI in June proposed a plan to exclude Snap and companies like it, and invited feedback.


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