Voskanian R.O. ECONOMIC ESSENCE OF MULTIPLE VOTING SHARES AND THE FEASIBILITY OF INTRODUCING THEM ON THE RUSSIAN FINANCIAL MARKET

The Bulletin of the Institute of Economics of the Russian Academy of Sciences № 4/2024. Finance.

Roza O. Voskanian

Cand. Sci. (Econ.), Docent, Associate Professor of the Department of Financial and Investment Management, Financial University under the Government of the Russian Federation, Moscow, Russia

ORCID: 0000-0002-1690-8262

ECONOMIC ESSENCE OF MULTIPLE VOTING SHARES AND THE FEASIBILITY OF INTRODUCING THEM ON THE RUSSIAN FINANCIAL MARKET

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Abstract

Entrepreneurs often encounter challenges related to capital dilution and diminished control over strategic development when forming equity capital. The author proposes the adoption of multiple voting shares as a potential solution to this problem. It has been disclosed that a joint-stock company can issue multiple voting shares at various stages of its life cycle. The circulation of these shares is limited due to their conversion into ordinary shares during purchase and sale transactions, or in case of a specified duration of circulation prohibition. The implementation of a voting multiplier has been announced; clarifying that possessing multiple voting shares does not entitle the owner to extra dividend payments. Conversely, multiple voting shares are transformed into common shares at a one-to-one ratio determined by market value. The result of the study of the economic essence of multiple voting shares was the identification and analysis of the option component of this security. Therefore, there exists the potential to adopt an innovative method of generating financing opportunities for the company by introducing multiple voting shares that encompass the advantages of ordinary shares and a derivative financial instrument.

Given the current state of the Russian financial market, where multiple voting shares are exclusively accessible to international companies, the author has developed proposals to modify the existing Russian legislation. These modifications will enable the standardization of equity formation practices among Russian joint-stock companies, while also enhancing the investment appeal of the Russian market for investors from allied states, where the trading of multiple voting shares is permitted.

Keywords: share, dual-class system, convertible securities, option, equity, financing.

JEL: G32, G23

EDN: QOAXDO

DOI: https://doi.org/10.52180/2073-6487_ 2024_4_98_115

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Manuscript submission date: 26.06.2024

For citation:

Voskanian R.O. Economic essence of multiple voting shares and the feasibility of introducing them on the russian financial market // Vestnik Instituta Ekonomiki Rossiyskoy Akademii Nauk. 2024. № 4. Pp. 98-115. (In Russ.). https://doi.org/10.52180/2073-6487_ 2024_4_98_115 EDN: QOAXDO

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