Wealth Tax: Why Special Control Shares Don’t Qualify as “Publicly Traded”

The Act exempts “publicly traded assets” from the Voting Floor Rule. But a publicly traded asset is defined as one traded on an exchange, a secondary market with frequently updated prices, or an electronic matching platform. Special control shares can’t be listed on any exchange, have no secondary market, and automatically convert to ordinary shares upon sale. They are shares in a publicly traded company — but they are not publicly traded assets. The distinction is critical, and the Act exploits it.

Dakessian Law monitors California tax legislation and litigation. More to come.