Taavet Hinrikus criticizes Wise's governance changes amid US listing plans

In recent months, the British fintech company Wise, formerly known as TransferWise, has faced internal conflict regarding its proposal to move its primary stock market listing from the United Kingdom to the United States. This plan is coupled with a controversial governance change that would extend the voting rights of Class B shareholders by another decade. Taavet Hinrikus, one of the co-founders of the company, who has since left the board, voiced his opposition to the bundled proposals in a letter directed to shareholders through his investment vehicle, Skaala Investments OU, which holds 5.1% of Wise’s shares. Hinrikus contends that the proposals are not only inappropriate but also unfair to shareholders who should be given individual opportunities to vote on each component separately. By combining the transition to a US listing with an extension of voting rights for Class B shareholders, the firm risks diluting the voting power of Class A shareholders, for whom the proposed structure presents a conflict of interest. He argues that this approach contradicts the principles of good corporate governance. Also pointed out in his letter was the fact that the Class B shareholders currently control over 90% of the voting rights, which he believes sets a dangerous precedent by entrenching power in the hands of a few individuals, including the CEO, Kristo Kaarmann. In a response to Hinrikus's letter, Wise’s board recognized his concerns but disagrees with his assessment of the proposals’ implications. The board emphasizes that a primary listing in the US would help Wise tap into a broader customer base and that the dual-class share structure is vital for the company's ongoing performance and strategic execution. Despite the internal disagreement, the board expresses confidence, asserting that shareholders have shown overwhelming support for the proposed changes, as evidenced by endorsements from shareholder advisory firms. The shareholders’ vote on this contentious proposal is expected soon, and despite warnings from Hinrikus about the implications for shareholder rights, Wise insists that maintaining its dual-class structure is essential for protecting its long-term strategy. The tensions between the co-founders, particularly between Hinrikus and Kaarmann, highlight underlying challenges within the company as it seeks growth in a competitive market. The path forward remains uncertain as the key votes approach, with potential implications for Wise's governance structure and its relationship with shareholders.