When a governance test becomes a test of governance

Frédéric Ducoulombier is programme director for climate regulation and policies at the Edhec Business School in Nice, France

Discretion under SFDR does not extend to dispensing with tests when their results would be awkward 

The SpaceX IPO is a live experiment in both governance testing and testing governance: how good-governance tests are applied, and how far they can be stretched when their results are inconvenient.

At the issuer level, the governance weaknesses are stark. Nasdaq controlled-company status exempts SpaceX from standard independence requirements for its board and its remuneration and nomination committees. Its capital structure goes further: super‑voting shares, with future issuances reserved for controlling insiders, entrench control in an unusually durable way. The charter also waives corporate-opportunity protections and weakens shareholder recourse through mandatory arbitration, jury-trial waivers and class-action limits.

At the market-infrastructure level, there is a separate conflict between the venue listing the IPO and its affiliated index business. When the latter rewrites fast-track inclusion rules ahead of record-breaking transactions, it is fair to ask whether the interests of index clients are being properly protected, and what this says about group-level conflicts governance. Other index providers, facing pressure to keep benchmarks current and capture momentum around large IPOs, have also moved toward faster inclusion routes. That matters because empirical work on fast index entry finds that mechanical buying by tracker funds can generate short-term price spikes that largely reverse, creating a sizeable wealth transfer from index investors. (...)