Latest news with #corporategovernance
Times
2 days ago
- Business
- Times
Wise founders fight over two-tier share structure
It was a friendship that went on to spawn one of the UK's most successful companies of the past 15 years. Kristo Kaarmann and Taavet Hinrikus were both twentysomething Estonian expats working in London in 2010 and horrified by the fees charged by banks for sending money back home. Thus was born Transferwise, now Wise, an £11 billion cross-border payments business that has made billionaires of them both. However, the friendship this week soured into open hostility as Hinrikus accused Kaarmann, the chief executive, of shoddy tactics in trying to push through on the quiet an extension to a dual share structure that gives him a near stranglehold on all big decisions at the fast-growing cross-border payments group for another ten years. In a letter reproduced on Monday by Wise, Hinrikus accused Kaarmann of endangering the reputation of Wise and contravening shareholder democracy by proposing a plan that would extend the current dual share structure by a further ten years. The detail had been 'buried' in a wider document about moving Wise's primary listing from London to New York. Hinrikus was, he said, 'deeply troubled' by the plan, going on to lament the 'lack of transparency' and the 'contravention of shareholder democracy'. Shareholders had previously been 'expressly promised' when the company floated in 2021 that the dual class structure would be dismantled by July 2026. The proposal 'risks eroding investor confidence, weakening shareholder democracy, and harming Wise's long-term valuation and reputation. Entrenching disproportionate power in the hands of a few sets a dangerous precedent — one that contradicts the values on which Wise built its public credibility,' Hinrikus wrote. He urged fellow shareholders to vote against the proposal unless it is amended and said he had support from several shareholders. It was a brutal criticism from Hinrikus, who stepped back from day-to-day operations at Wise before the London listing, but was chairman until December 2021. He has since gone on to set up an angel-investing business with stakes in more than 150 disruptive start-ups and has a net wealth estimated at $1.3 billion by Forbes magazine. Wise fired back a rebuttal, denying any lack of transparency and arguing that the dual-share structure often produced superior returns, especially among US technology companies that frequently adopted it. David Wells, chairman and a former finance director of Netflix, said shareholders were sounded out and had been 'overwhelmingly in favour' of the plan. • Kaarmann, in a blog post, said many of Wise's shareholders were excited about the proposals, before adding: 'Some people see things differently. My co-founder Taavet expressed his reservations in a letter we shared today.' He said Hinrikus had been 'an important part of our journey for years' but 'no longer plays an active role at Wise'. Through a mix of A shares and vote-heavy B shares, Kaarmann owns an 18.2 per cent economic interest in the company, but 54.7 per cent of the voting power, though this is capped at 49.9 per cent. Hinrikus owns an economic stake of 5.1 per cent, and 11.8 per cent of the votes. His complaint is focused particularly on the 'bundling' of the proposals into a single vote on both the primary listing move from London to New York and a ten-year extension to the current dual shares structure. Hinrikus is proposing a change to the proposals to remove the interconnectedness so that shareholders could vote in different ways on each. It was 'entirely inappropriate and unfair' to combine the two issues in a single vote, he wrote. The planned primary listing switch, first announced in June, had already sent shock waves through the London market, which is concerned that a trickle of listing switches already announced could burgeon into a serious problem for the London market and the ecosystem of bankers, brokers, lawyers and accountants that depends on it. Sir Pascal Soriot, chief executive of Britain's second-biggest listed company, AstraZeneca, is reportedly keen to move too. • Wise value tumbles after revenue growth slows and profit dips The row raises another talking point: many traditional UK investment houses dislike dual voting structures because they can give excessive power to incumbent managements. They argue that 'one share, one vote' is the optimum system. While recent changes to the listing rules have given more power to founders, traditional shareholders are sceptical and this week created a new lobbying group, the Governance for Growth Investor Campaign, to push the case to defend shareholder interests and promote good governance. Others argue that founder-friendly share structures give entrepreneurs the breathing space to make decisions for the long run without being pressured into short-term compromises. Concerns about the governance of Wise have already been highlighted after Kaarmann was named as a deliberate tax defaulter by HM Revenue & Customs after failing to pay a tax bill in 2017-18 and fined £366,000. He explained he fell behind with his paperwork. He was then fined £350,000 last year after an investigation by the Financial Conduct Authority over his fitness to run a big financial institution, but no further action was taken. The company has been a phenomenon, slashing the cost of cross-border payments for individuals and small firms and taking business from traditional banks. It boasted 9.8 million active users in the latest quarter who together hold balances with it of £22.9 billion, up 31 per cent. It employs 2,200 people in Tallinn and 1,000 in London. It has plans to expand into the US, which was one reason given for the listing switch because it would raise the company profile in America, as well as the attraction of higher liquidity in the shares and a larger pool of potential investors to attract. Until recently, Wise had been expected to apply to join a different investment category in London so that it would qualify for inclusion in the FTSE 100. That will not now happen. The proposal requires a majority of both A and B shareholders, as well as a 75 per cent 'super-majority' in the value of shares voted. This threshold, Hinrikus said, had been lowered, a fact he noted was only disclosed 'deep within the body of the [scheme circular] document'. The arrangement would be through a court-sanctioned scheme of arrangement. Proxy voting agencies including Glass Lewis and ISS have given the proposal their blessing. The biggest outside shareholder is the Edinburgh technology investment house Baillie Gifford with an 11.4 per cent economic interest and 10.2 per cent voting interest. Others include the US tech investor Andreessen Horowitz and Jupiter Fund Management. The voting is due to take place at shareholder meetings on Monday July 28.
CTV News
2 days ago
- Business
- CTV News
‘New kind of frontier': Shareholder proposals on AI becoming increasingly widespread
A gamer's hand rests on an illuminated keyboard Friday, Aug. 29, 2014, at the Penny Arcade Expo, a fan-centric celebration of gaming in Seattle. (AP Photo/Ted S. Warren) When Canada's most valuable companies hosted their annual general meetings this year, there was a new topic for shareholders to vote on among the usual requests to appoint board members and OK their executive compensation. The proposal from Quebec-based investor rights group le mouvement d'éducation et de défense des actionnaires centred on artificial intelligence. It asked 14 companies, including Canada's biggest banks, retailer Dollarama Inc. and telecom giant BCE Inc., to sign a voluntary code of conduct the federal government developed to govern the technology. Experts say the proposal is likely just the start of what they expect to become an annual phenomenon targeting the country's biggest companies — and beyond. 'This is a new kind of frontier in Canada for shareholder proposals,' said Renée Loiselle, a Montreal-based partner at law firm Norton Rose Fulbright. 'Last year, this was not on the ballot. Companies were not getting shareholder proposals related to AI and this year, it absolutely is.' Loiselle and other corporate governance watchers attribute the increase in AI-related shareholder proposals to the recent rise of the technology itself. While AI has been around for decades, it's being adopted more because of big advances in the technology's capabilities and a race to innovate that emerged after the birth of OpenAI's ChatGPT chatbot in 2022. The increased use has revealed many dangers. Some AI systems have fabricated information and thus, mislead users. Others have sparked concerns about job losses, cyber warfare and even, the end of humanity. The opportunities and risks associated with AI haven't escaped shareholders, said Juana Lee, associate director of corporate engagement at the Shareholder Association for Research and Education (SHARE). 'In Canada, I think, in the last year or two, we're seeing more and more shareholders, investors being more interested in the topic of AI,' she said. 'At least for SHARE ourselves, many of our clients are making it a priority to think through what ethical AI means, but also what that means for investee companies.' That thinking manifested itself in a proposal two funds at the B.C. General Employees' Union targeted Thomson Reuters Corp. with. The proposal asked the tech firm to amend its AI framework to square with a set of business and human rights principles the United Nations has. It got 4.87 per cent support. Meanwhile, MÉDAC centred its proposals around Canada's voluntary code of conduct on AI. The code was launched by the federal government in September 2023 and so far, has 46 signatories, including BlackBerry, Cohere, IBM, Mastercard and Telus. Signatories promise to bake risk mitigation measures into AI tools, use adversarial testing to uncover vulnerabilities in such systems and keep track of any harms the technology causes. MÉDAC framed its proposals around the code because there's a lack of domestic legislation for them to otherwise recommend firms heed and big companies have already supported the model, director general Willie Gagnon said. Several companies it sent the proposal to already have AI policies but didn't want to sign the code. 'Some of them told us that the code is mainly designed for companies developing AI, but we disagree about that because we saw a bunch of companies that signed the code that are not developing any AI,' Gagnon said. Many of the banks told MÉDAC they'll soon sign the code. Only CIBC has so far. Conversations with at least five companies were fruitful enough that MÉDAC withdrew its proposals. In the nine instances where the vote went forward, the proposal didn't succeed. It garnered as much as 17.4 per cent support at TD Bank but as little as 3.68 per cent at engineering firm AtkinsRéalis Group Inc. Loiselle said you can't measure the success of a proposal based on whether it passes or not. 'The goal of these shareholder proposals is more for engagement,' she said. Sometimes, even just by filing a proposal, companies reveal more about their AI use or understand it's an important topic for shareholders and then, discuss it more with them. While proposals don't always succeed, Lee has seen shareholder engagement drive real change. SHARE recently had discussions with a large Canadian software company. AI was central to its business but didn't crop up in its proxy statement — a document companies file governing their annual general meetings. The firm also had no board oversight of the technology. SHARE was able to get the company, which Lee would not name, to amend its board charter to include oversight of AI and commit to more disclosure around its use of the technology in its annual sustainability report. 'This is a really positive development and it's leading to improvement related to further transparency,' she said. If the U.S. is anything to judge by, Lee and Loiselle agree Canadian shareholders will keep pushing companies to adhere to higher AI standards. South of the border, AI-related proposals first cropped up around two years ago. They've targeted Apple, The Walt Disney Co. and even Netflix, where a vote on disclosing AI use and adhering to ethical guidelines amassed 43.3 per cent support. The frequency and spectrum of AI-related requests shareholders have only grown since and is likely to be mirrored in Canada, Loiselle said. 'The landscape for shareholder proposals is changing and I think that change is here to stay,' she said. This report by The Canadian Press was first published July 21, 2025.
Yahoo
2 days ago
- Business
- Yahoo
'New kind of frontier': Shareholder proposals on AI becoming increasingly widespread
When Canada's most valuable companies hosted their annual general meetings this year, there was a new topic for shareholders to vote on among the usual requests to appoint board members and OK their executive compensation. The proposal from Quebec-based investor rights group le mouvement d'éducation et de défense des actionnaires centred on artificial intelligence. It asked 14 companies, including Canada's biggest banks, retailer Dollarama Inc. and telecom giant BCE Inc., to sign a voluntary code of conduct the federal government developed to govern the technology. Experts say the proposal is likely just the start of what they expect to become an annual phenomenon targeting the country's biggest companies — and beyond. "This is a new kind of frontier in Canada for shareholder proposals," said Renée Loiselle, a Montreal-based partner at law firm Norton Rose Fulbright. "Last year, this was not on the ballot. Companies were not getting shareholder proposals related to AI and this year, it absolutely is." Loiselle and other corporate governance watchers attribute the increase in AI-related shareholder proposals to the recent rise of the technology itself. While AI has been around for decades, it's being adopted more because of big advances in the technology's capabilities and a race to innovate that emerged after the birth of OpenAI's ChatGPT chatbot in 2022. The increased use has revealed many dangers. Some AI systems have fabricated information and thus, mislead users. Others have sparked concerns about job losses, cyber warfare and even, the end of humanity. The opportunities and risks associated with AI haven't escaped shareholders, said Juana Lee, associate director of corporate engagement at the Shareholder Association for Research and Education (SHARE). "In Canada, I think, in the last year or two, we're seeing more and more shareholders, investors being more interested in the topic of AI," she said. "At least for SHARE ourselves, many of our clients are making it a priority to think through what ethical AI means, but also what that means for investee companies." That thinking manifested itself in a proposal two funds at the B.C. General Employees' Union targeted Thomson Reuters Corp. with. The proposal asked the tech firm to amend its AI framework to square with a set of business and human rights principles the United Nations has. It got 4.87 per cent support. Meanwhile, MÉDAC centred its proposals around Canada's voluntary code of conduct on AI. The code was launched by the federal government in September 2023 and so far, has 46 signatories, including BlackBerry, Cohere, IBM, Mastercard and Telus. Signatories promise to bake risk mitigation measures into AI tools, use adversarial testing to uncover vulnerabilities in such systems and keep track of any harms the technology causes. MÉDAC framed its proposals around the code because there's a lack of domestic legislation for them to otherwise recommend firms heed and big companies have already supported the model, director general Willie Gagnon said. Several companies it sent the proposal to already have AI policies but didn't want to sign the code. "Some of them told us that the code is mainly designed for companies developing AI, but we disagree about that because we saw a bunch of companies that signed the code that are not developing any AI," Gagnon said. Many of the banks told MÉDAC they'll soon sign the code. Only CIBC has so far. Conversations with at least five companies were fruitful enough that MÉDAC withdrew its proposals. In the nine instances where the vote went forward, the proposal didn't succeed. It garnered as much as 17.4 per cent support at TD Bank but as little as 3.68 per cent at engineering firm AtkinsRéalis Group Inc. Loiselle said you can't measure the success of a proposal based on whether it passes or not. "The goal of these shareholder proposals is more for engagement," she said. Sometimes, even just by filing a proposal, companies reveal more about their AI use or understand it's an important topic for shareholders and then, discuss it more with them. While proposals don't always succeed, Lee has seen shareholder engagement drive real change. SHARE recently had discussions with a large Canadian software company. AI was central to its business but didn't crop up in its proxy statement — a document companies file governing their annual general meetings. The firm also had no board oversight of the technology. SHARE was able to get the company, which Lee would not name, to amend its board charter to include oversight of AI and commit to more disclosure around its use of the technology in its annual sustainability report. "This is a really positive development and it's leading to improvement related to further transparency," she said. If the U.S. is anything to judge by, Lee and Loiselle agree Canadian shareholders will keep pushing companies to adhere to higher AI standards. South of the border, AI-related proposals first cropped up around two years ago. They've targeted Apple, The Walt Disney Co. and even Netflix, where a vote on disclosing AI use and adhering to ethical guidelines amassed 43.3 per cent support. The frequency and spectrum of AI-related requests shareholders have has only grown since and is likely to be mirrored in Canada, Loiselle said. "The landscape for shareholder proposals is changing and I think that change is here to stay," she said. This report by The Canadian Press was first published July 21, 2025. Tara Deschamps, The Canadian Press Sign in to access your portfolio
South China Morning Post
6 days ago
- Business
- South China Morning Post
Wahaha heiress Kelly Zong's inheritance battle puts Chinese family firms in spotlight
Kelly Zong Fuli, chairwoman and CEO of mainland China's largest soft-drinks producer Hangzhou Wahaha Group , is embroiled in a wealth-inheritance dispute that has prompted questions about the sustainability of the country's family businesses. The daughter of late founder Zong Qinghou is facing two lawsuits as three plaintiffs, claiming to be her half-brothers and half-sister, seek to prevent her from dealing with assets worth about US$2 billion. The feud surfaced just a year after the heiress won a battle for control of the company following her father's death in February 2024 at 79. The company asserted on Monday that the lawsuits were unrelated to its operations, but the situation provoked commentary about the prospects for family-owned firms amid a shaky economy and keen competition. 'No one waves a red flag when business is good, even though family businesses' questionable corporate governance and management structure cannot support their further growth,' said Wang Feng, chairman of Ye Lang Capital, a Shanghai-based financial services group. 'Family feuds and power battles in boardrooms may hurt employee morale and brand image, particularly at a time when the companies are undergoing succession from first-generation entrepreneurs to their offspring.' Wahaha said on Monday that it would not provide any further official response, the Southern Metropolis Daily reported. The company could not be reached for comment. According to a January Hong Kong court document obtained by the Post, the plaintiffs – Jacky, Jessie and Jerry Zong – were demanding that Kelly Zong honour her father's will because the late founder had promised them trusts valued at US$700 million each.
Reuters
7 days ago
- Business
- Reuters
UBS Japan appoints former veteran Toriyama as head of global banking
TOKYO, July 16 (Reuters) - Swiss Bank UBS (UBSG.S), opens new tab has re-hired Masazumi Toriyama to head its Japanese unit's global banking division, according to an internal memo seen by Reuters and confirmed by the company on Wednesday. Toriyama, who previously spent 18 years at UBS, will start on August 4, replacing interim head Yasunori Saku, who will become chairman of Global Banking Japan, the memo said. The moves are part of an ongoing expansion targeting a 50% increase in the division's headcount, a UBS spokesperson said. UBS is the latest foreign bank to expand its investment banking offering in Japan as the return of inflation and corporate governance changes has spurred M&A deal-making among Japanese firms. Earlier in July Citigroup Inc (C.N), opens new tab hired veteran investment banker Akira Kiyota from Nomura Holdings (8604.T), opens new tab and promoted insider Taiji Nagasaka as co-heads of investment banking for Japan. UBS's Global Banking Japan current chairman, Aki Nakagawa, will move to a general advisory role, while Masashi Oka, an independent director at Japanese technology firm NEC Corp (6701.T), opens new tab, will join as senior adviser, the memo said.
