S&P Dow Jones is to ban companies from issuing multi-class share structures across certain of its indices amid growing shareholder activism and worries over corporate governance.
The move is being viewed as a pushback against companies who are attempting to limit the number of shares in issue that carry voting rights.
S&P´s ban covers its flagship US equity gauges, including the widely followed large-cap S&P 500, along with the S&P MidCap 400 and the S&P SmallCap 600.
It follows the controversial decision by social media company Snap to sell shares with no voting rights as part of its IPO earlier this year.
Technology names such as Snap have tended to favour no voting shares as the founding directors of the firm seek to retain more control.
This approach jars with corporate governance best practice as it means the management of companies become much less accountable to shareholders.
S&P said that companies with multiple share class structures tended to treat different shareholder classes unequally with respect to voting rights and governance issues in general.
However, existing members of the S&P such as Alphabet, Facebook and Berkshire Hathaway will not be impacted by its decision.
FTSE Russell move
S&P´s ban follows that of rival index provider FTSE Russell, which moved to exclude Snap from its stock indices last week over the no voting rights issue.
FTSE Russell claimed it made the decision due to the increasing importance of corporate governance for investors.