In the linked WSJ article, that explains this quite a bit better than the medium blogpost. Basically, it appears that the main thing is that the voting power of shares win increase with the time the shares are owen. (Though there's talk of opting in to this process.) There's also going to be a prohibition on companies giving quarterly earnings guidance.
It seems like it's intended to reward founders and long-term employees of startups by privileging them over the more retail class of investor, and people with short-term goals, like activist investors. (But this is a mixed thing - it's more accountable than a setup with multiple stock classes where the founders retain all control.)
EDIT: Random thought: I wonder how this exchange would handle shorting stock, when it comes to the tenure requirement.
> it's intended to reward founders and long-term employees of startups by privileging them over the more retail class of investor
It will just prioritize investors with the sense to stick their shares in an SPV (e.g. an LLC or trust) and then sell the SPV with the premium voting rights attached. (Also amplify the benefits of intergenerational wealth transfer.)
There is no "just". If someone can come up with that exploit in an HN comment, it would be incredible if there were no provisions to explicitly forbid this kind of share from being used in this fashion.
It’s an NP hard problem. Tracing beneficial ownership is tough to scale. That’s why our system does it sparingly, e.g. when investigating malfeasance. Every past attempt at systematising this trace function has run into hurdles which are now predictable. They aren’t easy to solve without creating unacceptable side effects, and it’s easier for the beneficial owner to adapt than for an exchange to re-write its rules.
Seems like it might do a better job of incentivizing long-term thinking if you had to lock your shares, and your vote were multiplied by how long you have to wait before selling them.
Naked shorters by definition own no stock currently so have no right to vote, but it may or may not affect calculations regarding the average seniority of stock against which rights are measured (it cannot be absolute, since you could conceivably have a situation where everybody shuts purchased the stock, and thus ownership of all would be zero, and thus nobody would have a right to vote).
And what of options and other derivatives? What of trust funds and other intermediate vehicles of ownership that might themselves have (perhaps partially) changed hands?
What happens when stock is held by a shell company (or trust fund) and its property partially changes? What happens when one LTSE form buys up part of another LTSE firm that partially owned the first one to begin with?
(I assume that rules are built with ADG in mind, general constructs are far more involved.)
On the contrary, unlike most systems today, our rules are very favorable to both retail investors and employees. Anyone can register their shares for Long-Term voting, not just founders or big institutions.
In the linked WSJ article, that explains this quite a bit better than the medium blogpost. Basically, it appears that the main thing is that the voting power of shares win increase with the time the shares are owen. (Though there's talk of opting in to this process.) There's also going to be a prohibition on companies giving quarterly earnings guidance.
It seems like it's intended to reward founders and long-term employees of startups by privileging them over the more retail class of investor, and people with short-term goals, like activist investors. (But this is a mixed thing - it's more accountable than a setup with multiple stock classes where the founders retain all control.)
EDIT: Random thought: I wonder how this exchange would handle shorting stock, when it comes to the tenure requirement.