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> Voting rights tied to the length of time one has held shares? That cannot fly.

It also raises the question of how in the world they'd expect to prevent working around it by using something similar to the Depository Trust Company so that the actual shares don't change ownership.

Given that large markets already have mechanisms in place where nominees/trusts/proxies are used to work around other inefficiencies in the current systems, it seems a bit naive to think this wouldn't be worked around too.

Or what about something as simple as inheritance? Does passing a stock by bequest reset the voting clock? If not, then we can rig people's wills to pass ownership, creating a perverse market for the nearly-dead to sell their services in exchange for cash up front.

> How does one value a share that, if sold, would immediately diminish in value?

v2 = a * v1

> How is a lender to grant credit based on such collateral?

v2 = a^2 * v1

The first where a share is bought to be held for voting rights or long term investment and the second where a share is bought to be sold. Where "a" is the value retained.

It would be priced in like any other commission, fee or tax.

I don't think that it would sow chaos -- financial institutions and investors are pretty good at estimating value.

> Options would be massively difficult, leading to a secondary market for shell contracts in order that shares need not officially change hands.

Like derivatives? How about we just regulate those across the board.

> financial institutions and investors are pretty good at estimating value.

Except when they're really, really not.

See: mortgage tranches in 2006.

Good point. That really should be "financial institutions and investors are pretty good at calculating value". The value before and after purchase would not be obfuscated in any way. It is no more an estimate than the commission fee or tax is an estimate.

The market corrected itself which is really what markets give you.

Contract Law != Markets.

It can certainly be pushed onto the runway. Whether it flies or not depends on whether anyone wants to buy it, and that depends on whether what's behind it is worth buying. All markets do is find a price for you based on supply vs demand (with some complexity due to monetary distribution behind the scenes.)

There is nothing stopping startups coming up with their own forms of share holding (cf facebook for example). In general the ones that will be able to pull it off will be the ones everybody wants to own a piece of.

All contracts are after all is an agreement between two parties - in this case, copied and pasted from extremely hazardous shipping agreements used in 18th century when the chances of a ship coming back at all weren't that good, press gangs were being used to crew naval shipping, and the entire clearing system for the London Banks was being run by their clerks in a backroom bar in a pub on Lombard st. Times change. It took them fifty years, but eventually the bank managers noticed.

> Voting rights tied to the length of time one has held shares?

I like this philosophy. It prevents the Carl Icahn's of the world to stop breaking up companies.

Yeah -- my gut intuition is that this would be a GREAT opp for custodians of shares. (Your shell contract example basically)

You'd buy huge tranches of companies and swap out synthetic exposure to secondary investors who want just temporary directional risk in these companies. Modeling the relative value of the true shares and synthetic shares would be interesting/fun.

This already exists. It is called a Total Return Swap. It allows the purchase of the economics of a security without the actual ownership.

I used to trade them =p

Me too! Which markets?

Look at how hard and expensive it is for the average person to have individual membership of the LSE and from what i can see NSY and NSADAQ dont allow it at all.

This is favoring insiders