DCSS Conundrum: Fintech’s Ex-CEO Criticises US Relisting Plans
July 24, 2025
FinTech company Wise’s co-founder and former CEO has urged shareholders to vote against plans extending its dual-class share structure (DCSS) by a decade as it intends to shift its primary listing to the US.
Wise’s co-founder Taavet Hinrikus has spoken out against the expanded timeframe of the DCSS, branding the proposition as “inappropriate and unfair”. Hinrikus owns more than 5% of the £9 billion (U$12.2 billion) fintech’s shares and served as its CEO from 2011 until 2017 and its Chairman until the end of 2021.
According to reports from Sky News, Hirinkus intends to ask proxy advisors to recommend that shareholders vote against the imminent proposal to lengthen the sunset period for the firm’s DCSS.
The British money transfer firm introduced a DCSS in 2021 when the company was listed on the London Stock Exchange. The share structure is due to return to a single-class share structure in 2026 under the existing time-based sunset provisions.
However, as Wise considers shifting its primary listing to the New York Stock Exchange there have been discussions over stretching its DCSS to 2036 to entice investment.
The company is set to hold a shareholder meeting before the end of this month where investors will vote on the proposal.
DCSS creates separate classes of shares with different voting powers, widely referred to as Class A and Class B shares. These separate shares often give founders and senior figures at companies greater control and restrict the influence that shareholders can have.
Sometimes DCSS are subject to additional protections for minority shareholders, such as sunset clauses which sees companies revert to single-class share structures after a certain time-period.
DCSS structures were permitted on the UK’s premium listing segment in late 2021 following changes to the Listing Rules by the Financial Conduct Authority (FCA). The rules were further relaxed in 2024 as part of the FCA’s overhaul of the listing rules, including a weakening of the time-based sunset clause requirements for companies with a DCSS.
There are no sunset clause rules for DCSS in the US, despite institutional investor groups such as the Council of Institutional Investors advocating for ‘one-share, one-vote’ as a bedrock principle of good corporate governance. In April, Minerva Analytics reported that as part of a letter sent to the US House Committee on Financial Services the council reaffirmed the necessity of the ‘one-share, one-vote’ principle for good corporate governance.
Hirinkus demanded that Wise separate the proposals for the dual-listing and the extension of the sunset period for Class B Shares’ voting rights and not be inter-conditional.
This would allow shareholders to vote against the extension of the sunset period for the DCSS while voting in favour of the dual listing in the United States, or vice-versa. It is generally considered good practice that each substantive resolution should be voteable in its own right and institutional investor guidelines discourage the bundling of two or more matters for consideration under one resolution.
He also requested that the company provide additional detail on the rationale for the proposed extension of the sunset period and the length of time selected, explaining how this aligns with the long-term interest of owners. “This will provide transparency, empower shareholders to vote independently on each critical issue and ensure directors remain accountable to all stakeholders,” said Hirinkus.
He warned that rejecting the requests “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,” Hirinkus added. “Wise owners deserve governance structures that enhance value, not entrench power.”
DCSS is a polarising issue for shareholders and for the wider financial industry. Those defending DCSS cite its encouragement of founders to publicly list stock by allowing them to retain control, insulating founders from activist shareholders firm and allowing management to adopt a long-term focus.
However, there are significant drawbacks for shareholders. These include damaging the ability of investors to hold companies to account, putting public shareholders at greater financial risk than others with superior voting power and making it more difficult for investors to have their voices heard.
Last July, Minerva Analytics reported on updates made by the FCA to the UK’s listing regime to streamline the rules with the aim of boosting growth and innovation.
This included permitting investors to hold dual-class shares with weighted voting rights indefinitely with no sunset clause for individuals and up to ten years from listing for companies.
This week, Minerva Analytics reported on the newly created Governance for Growth Investor Campaign, which is looking to underline the importance of effective corporate governance standards and investor rights mechanisms in strengthening UK capital markets and companies.
The campaign is chaired by UK pension scheme Railpen. The organisation’s Head of Investment Stewardship and Co-Head of Sustainable Ownership Caroline Escott stated that the FCA’s UK listing changes had “watered down many longstanding shareholder rights” without having a noticeably positive effect on the UK’s IPO environment.
Escott also chairs the Investor Coalition for Equal Votes, a proponent of the one share, one vote philosophy and a DCSS critic. In November, Minerva Analytics reported on a report published by the coalition detailing the voting policies of 31 of the world’s largest investors on DCSS.
The availability and use of differential ownership and control structures – such as non-voting shares, double-voting shares, golden shares and priority shares – vary depending on local laws and regulations. Where companies have differential voting rights, institutional investor voting policies tend to set out an expectation to see a clear rationale for this, as well as protections for minority shareholders, such as a sunset mechanism, putting the continuation of the structure to a regular shareholder vote, and the disclosure of voting results disaggregated by share class.
DCSS tend to be more common in the US than in the UK and are particularly prevalent among tech firms. In recent years in the US there have been controversies around controlled companies looking to move the country or state of incorporation or listing to benefit from a more favourable regulatory environment.
This includes electric vehicle manufacturer Tesla. While not having a DCSS, the company moved its incorporation from Delaware to Texas after a judge in Delaware voided Musk’s U$56 billion pay package over transparency and fairness concerns, as reported by Minerva Analytics.
As highlighted in Minerva’s 2024 voting guideline update, a company with a controlling shareholder seeking reincorporation to a state with more lenient laws and greater protection from liability for directors and officers could pose a major concern for minority shareholders.
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Last Updated: 24 July 2025