U.S. OTC MARKET PROPOSES ONE-SHARE, ONE-VOTE
The National Association of Securities
Dealers said all stock exchanges should require that listed
companies adopt a "one-share, one-vote" rule, but with a few
exceptions.
    In a letter to the Securities and Exchange Commission, NASD
President Gordon Macklin said the group would be happy to be
the first exchange to adopt a uniform rule but with certain
exceptions.
    "Clearly the NASD would willingly be the first to do so. If
a voluntary private sector resolution is not practical, then
the commission should adopt the rule to apply to all markets,"
the NASD said.
    An NASD study found that 95 percent of the companies in the
OTC offered only one class of stock.
    The NASD proposal calls for all stock markets to have a
uniform rule which would emphasize the principle of equal
voting rights, but allow for legitimate variations.
    The NASD would allow companies to issue shares that do not
have voting rights as long as the limitation is clearly spelled
out to investors. It wants to prevent listed companies from
turning voting shares into non-voting shares, without
shareholder approval, Parrillo said.
    "A uniform rule should be written to cure what has been
construed by some to be an abusive practice involving the use
of stock with other than full voting rights," the association
said in the statement.
    Exceptions would include:
    -- shares in a registerd public offering where all facts
connected with the company's capital structure are clearly
spelled out in the prospectus.
    -- shares issued in connection with a merger, acquisition
or recapitalization where the exchange of shares is accompanied
by detailed proxy material.
    The NYSE rule would allow companies to have a dual class of
stock only if a majority of publicly held shares and a majority
of independent directors on the board approve the move. The
NYSE has allowed its few listed companies which have dual
classes to continue trading, pending approval from the SEC.
    The NASD specifically wants to disallow issuance of dual
class shares where those with superior voting rights are not
resalable. Parillo said such a provision would in effect
prevent a firm from ever being purchased by anyone else.
 Reuter
