Unequal Voting and the Business Judgment Rule

Posted by Charles M. Elson (University of Delaware) and Craig K. Ferrere (U.S. Court of Appeals, Third Circuit), on Saturday, April 7, 2018 Editor's Note: Charles M. Elson is the Director of the John L. Weinberg Center for Corporate Governance, and the Edgar S. Woolard, Jr., Professor, at the University of Delaware; Craig K. Ferrere is a term clerk for the Honorable Thomas L. Ambro of the United States Court of Appeals for the Third Circuit. Related research from the Program on Corporate Governance includes The Untenable Case for Perpetual Dual-Class Stock (discussed on the Forum here) and The Perils of Small-Minority Controllers (discussed on the Forum here), both by Lucian Bebchuk and Kobi Kastiel. Increasingly, company founders have been opting to shore up control by creating voting structures that undercut shareholder voting power, where only a decade ago almost all chose the standard and accepted one-share, one-vote structure.…

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