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There still isn't a set Snapchat IPO date, but we know one important thing: Snapchat shareholders won't have voting rights.
This is unprecedented, as Snapchat could be the first company to sell non-voting stock in an IPO on a U.S. stock exchange.
According to Fortune, Snapchat shareholders won't have the right to:
- Nominate, elect, or replace board members
- Submit shareholder proposals
- Place pressure on the board to fire the CEO or anyone in management
- Approve or block a merger or takeover offer
- Know when a large investor has purchased more than 5% of Snapchat stock
In Snap's IPO filing, it says this structure is designed to discourage tactics that can be used in proxy fights.
For instance, activist investors will not be able to buy a large position in the company and place pressure on management to increase shareholder value.
Increasing shareholder value in the short term can come at the expense of long-term profits through cutting research and development projects that are currently unprofitable.
That means CEO Evan Spiegel can focus on creating features and new products that could generate long-term revenue growth.
But if shareholders don't like how the company is run, they won't be able to submit proposals or vote to replace board members.
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