On July 24, 2026, Chinese new energy vehicle maker Smart Electric Cloud Car (IEVC) formally filed its prospectus with the U.S. Securities and Exchange Commission (SEC), planning to list on Nasdaq. The prospectus disclosed that IEVC would adopt a dual-class share structure (AB shares), where B shares held by founders and management carry 10 votes per share, while A shares held by public investors carry only 1 vote per share. This arrangement quickly sparked market debate—between founder control and investor protection, is dual-class shares becoming the 'standard' for new economy companies going public? And what risks are hidden?
Event Background: IEVC's 'Privileged' Design
IEVC was founded in 2020, focusing on the integration of smart electric vehicles and cloud computing platforms. Its founder Wang Ming previously served as a senior executive at Baidu's autonomous driving division. According to the prospectus, after the IPO, the founder team will hold about 25% of total shares but control over 70% of voting rights through B shares. This means that even if external investors hold 75% of economic interests, they cannot veto the founder's decisions on key matters. IEVC explicitly stated in risk factors that 'the dual-class share structure concentrates power in the founder, which may harm the interests of other shareholders.'
Why Choose Dual-Class Shares?
In an open letter to investors, Wang Ming stated: 'The core of competition in smart electric vehicles is technological iteration and long-term strategy. We don't want to be disturbed by short-term profit pressure. Dual-class shares ensure the company focuses on the future 10 years from now, not the next quarter's earnings report.' This logic aligns with many tech giants—Google, Facebook, and ByteDance (unlisted) all use similar structures. However, critics argue that for IEVC, an unprofitable startup with a staggering cash burn rate, over-concentrated power may lead to 'autocratic decision-making,' increasing investment risks.
The History of Dual-Class Shares: From Controversy to Mainstream
Dual-class share structure is not new in global capital markets. As early as the 1920s, Dodge Brothers issued non-voting shares, but the NYSE once banned such structures. In the 1980s, media companies revived AB shares to protect founder control. After 2010, tech companies followed suit—Google's 2012 stock split and Snap's 2017 IPO (with zero-voting shares) pushed controversy to its peak. Today, the Hong Kong Stock Exchange and Singapore Exchange have accepted dual-class shares, and China's STAR Market also allows 'voting rights differential arrangements.'
Supporters argue that unequal voting rights help founders fend off hostile takeovers and unleash long-term innovation potential; opponents point out that it weakens 'shareholder democracy' in corporate governance, potentially leading to related-party transactions, excessive compensation, and aggressive strategies. Renowned investor Warren Buffett once stated: 'I will not invest in any company with dual-class shares, because it violates the basic fairness of capital.'
Uniqueness of IEVC Case: New Energy Track and Regulatory Risks
IEVC is not the first new energy vehicle maker to adopt dual-class shares. Previously, Tesla tried to introduce it but eventually abandoned; Li Auto and XPeng retained AB share structures in their Hong Kong secondary listings. However, IEVC's uniqueness lies in its 'dual China-US regulatory' context. On one hand, the SEC strengthened audit oversight of Chinese concept stocks in 2025, becoming more sensitive to VIE structures and voting arrangements. On the other hand, the China Securities Regulatory Commission issued the 'Interim Measures for the Administration of Overseas Securities Offering and Listing by Domestic Enterprises' in June 2026, requiring overseas-listed companies to disclose actual control and risks.
Market analysts point out that IEVC's AB share structure may face stricter scrutiny. The U.S. investor advocacy group 'Investor Protection Alliance' has publicly called on the SEC to reject IEVC's listing application, stating that 'the founder's power far exceeds his responsibility.' However, the prospectus shows that IEVC has set several protective clauses, such as B shares automatically converting to A shares upon specific founder events (death, disability), and major mergers requiring approval by over 2/3 of voting rights (including A shares).
How Should Investors Respond? Risk Identification and Strategy Suggestions
For ordinary investors, investing in dual-class share concept stocks requires more careful due diligence. Here are several key dimensions:
- Founder Quality Assessment: Examine the founder's historical integrity, strategic vision, and team stability. For example, IEVC founder Wang Ming had successful experience at Baidu but lacks independent operation experience.
- Corporate Governance Terms: Read the company's charter regarding voting right exceptions, related-party transaction approval, independent director appointments, etc. IEVC stipulates that the audit committee and compensation committee must be composed of a majority of independent directors, but the nomination committee remains under founder control.
- Valuation Reasonableness: Due to voting right dilution, AB share companies typically enjoy a 'control premium,' but investors should be wary of excessive premiums. IEVC's offering price range implies a price-to-sales ratio of about 12 times, higher than the industry average of 8 times.
- Exit Risk: If the founder makes wrong decisions, the stock price may plummet, but external shareholders cannot replace management through voting. Pay attention to whether there is a 'sunset clause' (e.g., automatic conversion after 10 years). IEVC has not set a specific term.
Industry Trends and Policy Outlook
Globally, dual-class share structures are showing two major trends: first, the popularization of 'sunset clauses,' where voting right differentials automatically terminate after a specific period, such as the Singapore Exchange's mandatory 10-year sunset; second, tighter regulation of 'weighted voting rights,' with some European exchanges banning new issuances. In China, the STAR Market allows special voting rights but requires 'each voting right differential not exceeding 20 times' and a market cap threshold of no less than 10 billion yuan. The IEVC case may push regulators to further improve information disclosure requirements.
Professor Liu, a renowned corporate governance expert and director of the Financial and Securities Research Center at Peking University, commented: 'Dual-class shares are not black and white; the key lies in balance. If IEVC can periodically evaluate founder performance after listing and establish an independent director 'veto power,' the conflict may be alleviated.'
Conclusion: Opportunities and Warnings Coexist
IEVC's IPO is one of the most controversial financing events in the new energy sector in 2026. For investors eager to participate in high-growth new economy, dual-class shares may bring long-term huge returns, but also bear the cost of governance disorder. As stock god Buffett said: 'The key to investing is not the circle of competence, but the distribution of power within the circle.' Before clicking the buy button, be sure to see the voting rights behind each share—that is where real control lies.
StockWise will continue to follow IEVC's listing progress and the latest developments in the dual-class share field, providing investors with in-depth analysis and practical guidance.
