Florence Muchai
Well, this is a Bitcoin surprise. Michael Saylor, the Executive Chairman of MicroStrategy, has lost his voting control over the company, which means it has lost its status as a “controlled company” on Nasdaq.
Because one person controlled corporate governance and made unilateral decisions, such as changing the business’s focus from software to Bitcoin acquisition, NASDAQ classified MicroStrategy as a “controlled company.”
Historically, MicroStrategy’s dual-class share structure separated equity ownership and voting rights. As of October 21, Saylor controlled 51.7% of MicroStrategy’s common stock voting power.
Michael Saylor’s commanding position over Class B shares, which have 10 times the voting power of Class A shares, enabled him to maintain majority control despite a lower percentage of equity exposure.
This development contradicts current plans for Bitcoin purchases, resulting in disagreements among market participants about the significance of this uncertainty.
Michael Saylor may fail to keep his BTC promise
According to “On The Brink” podcast co-host Matt Walsh on X, as of November 20, “Michael Saylor no longer has voting control over the firm, MicroStrategy.” Walsh leads the line of queries about what will happen to the company’s investments.
He asks, “Who are the MSTR experts out there? Curious how relevant this would be if MSTR were to trade at a discount to NAV (i.e., like a closed-end fund) in a risk-off regime. Does this leave the company exposed to an activist?”
MicroStrategy, under Michael Saylor, has been buying relentlessly Bitcoin. While the company continues to buy Bitcoin regularly, an important change in its governance system has sparked widespread interest among market investors.
The company had projected that Saylor will lose voting control this month owing to the large volume of shares sold under the Sales Agreements. He will no longer own more than 50% of the total voting power. Notably, this aspect is required for any firm to qualify as a “controlled corporation” under Nasdaq’s guidelines.
According to NASDAQ governance guidelines, controlled companies are not required to maintain an independent board of directors, compensation or nominating committees, or independent nominations. MicroStrategy was also not required to have independent directors decide Saylor’s salary or that of consultants, legal counsel, and other advisors.
Bitcoin’s situation at MicroStrategy
At the end of October, MicroStrategy announced a $42 billion worth of debt to acquire Bitcoin. In the last 48 hours, it upsized a $1.75 billion interest-bearing round to $2.6 billion with a 0% coupon.
Deferring all interest payments, investors in this round will only gain if the price of MSTR rises. On their next conversion date, they can convert at today’s share price. At the time of writing, MicroStrategy’s market value is $111 billion, and it holds $31 billion in bitcoins.
A user on X has called Michael Saylor, a snake oil merchant. The user asserts, “Modern-day snake oil salesman. Let’s not forget Saylor blew up Microstrategy once before in 2000, causing the stock to crash 99% from $300 -> $0.50. History may not repeat, but it certainly will rhyme.”
Approximately a week ago, MicroStrategy formed a new board nominating committee directed by Carl J. Rickertsen and adopted a new charter. Further information about Rickertsen’s nomination and the powers conferred by the new charter will be released in future SEC filings, which are due no later than the company’s next quarterly report in mid-February 2025.
Many investors credit Michael Saylor for his Bitcoin enthusiasm and BTC’s institutional investment. Worries that his lost voting rights could impact Bitcoin’s price are far-fetched. This has been deemed a Trump rally.
BTC hit its all-time high at $98,000. According to on-chain data from CoinGecko, Bitcoin is worth $97,973 today, a 4.6% increase in the last 24 hours and 7.0% higher than its value seven days ago.
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