Wise PLC (LSE:WISE) shares fell on Monday after co-founder and 5% shareholder Taavet Hinrikus called for the fintech's proposed move of its main listing from London to New York to be blocked due to problems with governance connected with the shift.
Hinrikus called on fellow shareholders to reject the proposals, arguing the proposal includes significant changes to shareholder voting rights that have not been given due attention ahead of the shareholder vote next Monday, 28 July.
Wise in June announced its plans to shift its primary listing to the US, following a herd of other names that have made the move in recent years, including CRH, Flutter and Ferguson.
Hinrikus’s investment firm, Skaala Investments, issued a statement saying it was "deeply troubled" by some of the recommendations contained in the plan, including ("buried in the proposal") a demand to extend the enhanced voting rights of class B shareholders by 10 years.
This extension to 15 years from the IPO back in 2021 "significantly exceeds standard practice," the letter notes, which is typically capped at 5-7 years after listing.
Skaala, which owns holding 52,481,199 Class A Shares and 33,466,926 Class B Shares, urged the company to allow shareholders to vote separately on the governance measures and the listing change, rather than presenting them as a single package.
Wise's dual-class share structure grants about 90% of voting rights to holders of class B shares, which is currently due to expire by July 2026.
Skaala's letter also raises concerns that Wise did not adequately disclose the scale of the governance change upfront, warning that such an approach could "risks diminishing trust and compromising the business integrity crucial for a payments provider".
The letter makes three recommendations, calling for fellow shareholders to demand separate, non-inter-conditional votes on Wise’s dual listing and the proposed extension of class B share voting rights, along with greater transparency on the rationale and duration of the governance change.
Wise was also urged to amend its shareholder materials to reflect these changes and ensure accountability to all stakeholders.
"Ignoring the above request 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."
Wise said in response: "The board considers the dual listing proposal to be in the best interests of Wise and Wise owners and unanimously recommends that Wise owners vote in favour of the scheme and each related special resolution as each director intends to do in respect of their own holdings."