Ramaphosa argues that institutions may well abhor N shares, but many of them support the use of preference shares and pyramids, which also entrench control. The real test is to evaluate whether there has been value creation, which would allow controlling black shareholders to continue using low-voting shares. But one must be careful not to confuse governance issues with financing structures. He also suggests a trial period for start-up companies, after which shareholders can evaluate the value added and decide whether the shares should be compulsorily enfranchised. Vlok says that while low-voting shares limit rights, shareholders still have the ability to censure directors in public, as well as the Companies Act for moral and legal redress.
Conversion also poses a headache for ordinary shareholders.
N shares generally trade at a discount to ordinaries, but a conversion would give an N shareholder the same voting rights as an ordinary shareholder. The JSE says that this raises the potential to dilute ordinary shareholders' value. But conversion can have benefits, as the market tends to reward clean capital structures.