Key Takeaways
- • Norway's $2.3 trillion sovereign wealth fund warns that shareholder rights are eroding across major markets, including the U.S., UK, Europe and Hong Kong, according to Reuters.
- • Fund officials cite dual-share class structures, which give founders and insiders greater voting power, as a central concern, alongside reduced reporting requirements and restricted access to sue companies and boards.
- • Fund CEO Nicolai Tangen attributes the trend partly to competition between stock exchanges for IPO listings, which he says has led to more deviations from normal governance standards.
- • The fund holds a 0.05% stake in SpaceX, worth $1.22 billion as of June 30, where Musk holds over 80% of voting rights and serves as chair, CEO and CTO.
- • The fund is advocating to exchanges, regulators and companies for guardrails such as sunset clauses on founder voting rights.
Summary
Norway's $2.3 trillion sovereign wealth fund is raising concerns about what it describes as a steady erosion of shareholder rights across major markets, warning that regulations increasingly favour company founders and insiders over independent investors, according to Reuters. The fund, which invests the Norwegian state's oil and gas revenues and owns on average 1.5% of all listed companies globally, is the world's largest single stock market investor and has frequently set the pace on environmental, social and governance (ESG) issues.
Fund officials, speaking to Reuters, said they are concerned about a general erosion of the rights of independent shareholders, spanning dual-share class structures to limits on how investors can gather information from companies. Chief governance and compliance officer Carine Smith Ihenacho said the fund sees diminished shareholder rights in many markets, not only the U.S. but also the UK, Europe and Hong Kong. She said reporting requirements are becoming more voluntary and that in some places access to suing companies and boards is being restricted. "We have seen it spreading and we're concerned that it may spread further," she said.
Dual-share classes, which typically give founders and insiders more voting power while independent investors hold standard shares with less influence, are a principal concern. Smith Ihenacho said that if founders receive different voting rights, "you need certain guardrails," and that the fund is watching such structures closely, including sunset clauses. CEO Nicolai Tangen said competition between stock exchanges to win new IPOs has led them to permit more deviations from normal practice than previously seen.
The fund participated in the IPO of Elon Musk's SpaceX. As of June 30, its 0.05% stake was worth $1.22 billion, in line with its weighting in the fund's benchmark index but modest relative to its other tech holdings. Musk holds over 80% of voting rights and combines the roles of chair, chief executive officer and chief technology officer, raising governance questions for independent shareholders. Fund officials declined to comment specifically on SpaceX's governance. To counter the trend, the fund said it is advocating on these issues with stock exchanges, regulators and companies.
Fund officials, speaking to Reuters, said they are concerned about a general erosion of the rights of independent shareholders, spanning dual-share class structures to limits on how investors can gather information from companies. Chief governance and compliance officer Carine Smith Ihenacho said the fund sees diminished shareholder rights in many markets, not only the U.S. but also the UK, Europe and Hong Kong. She said reporting requirements are becoming more voluntary and that in some places access to suing companies and boards is being restricted. "We have seen it spreading and we're concerned that it may spread further," she said.
Dual-share classes, which typically give founders and insiders more voting power while independent investors hold standard shares with less influence, are a principal concern. Smith Ihenacho said that if founders receive different voting rights, "you need certain guardrails," and that the fund is watching such structures closely, including sunset clauses. CEO Nicolai Tangen said competition between stock exchanges to win new IPOs has led them to permit more deviations from normal practice than previously seen.
The fund participated in the IPO of Elon Musk's SpaceX. As of June 30, its 0.05% stake was worth $1.22 billion, in line with its weighting in the fund's benchmark index but modest relative to its other tech holdings. Musk holds over 80% of voting rights and combines the roles of chair, chief executive officer and chief technology officer, raising governance questions for independent shareholders. Fund officials declined to comment specifically on SpaceX's governance. To counter the trend, the fund said it is advocating on these issues with stock exchanges, regulators and companies.
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