NEW YORK (Reuters) - Investors in the upcoming initial public offering of WeWork’s parent, The We Company, are being asked to lower their standards for corporate governance beyond what other technology startups have demanded, securities law experts said on Wednesday.

FILE PHOTO: Adam Neumann, CEO of WeWork, speaks to guests during the TechCrunch Disrupt event in Manhattan, in New York City, NY, U.S. May 15, 2017. REUTERS/Eduardo Munoz/File Photo

Adam Neumann, the company's CEO and co-founder, will control the company through his ownership of shares with high voting power, a common structure among newly listed Silicon Valley unicorns, including ride-sharing startup Lyft Inc LYFT.O, Snapchat owner Snap Inc SNAP.N and social media giant Facebook Inc FB.O.

The We Company will take a financial hit for this decision, as the S&P 500 and some other major indices exclude companies with dual-class shares. On the other hand, many investors have overcome their concerns about founders retaining a tight grip on fast-growing startups, because of fear of missing out on potentially lucrative returns.

But We Company, whose losses are widening with no stated path to profitability, has awarded Neumann unusual privileges that go beyond what most stock market investors are accustomed to, corporate governance experts said.

These include giving his estate a major say in his replacement as CEO, and tying the voting power of shares to how much he donates to charitable causes, according to We Company’s IPO filing made public on Wednesday.

“WeWork is pushing the outer bounds of what’s acceptable for a public company,” said Glenn Davis, research director at the Council of Institutional Investors, an investor advocacy group. “The IPO filing indicates that the objective is to preserve incumbent control indefinitely.”

We Company co-founder Rebekah Neumann, Adam Neumann’s wife who is the company’s chief brand and impact officer, will pick his successor if he dies or is permanently disabled in the 10 years following the IPO, alongside two company board members. She will get to pick those board members if two people currently on the board, Bruce Dunlevie and Steven Langman, step down.

The set-up is odd, according to Charles Elson, director of the corporate governance center at the University of Delaware.

“You want someone independent to be in charge of succession planning,” Elson said. “Given the fact it’s a dual-class company, though, it doesn’t really matter because no matter what happens, he and his family remain in control.”

The couple is also incentivized to donate $1 billion to charities over the next decade to keep their control of the company at current levels. Neumann will retain his high vote shares if he hits the target, if not, the number of votes per share will decrease, according to the IPO filing. While he would still likely control the company, his grip could loosen if the voting power of his shares becomes diluted.

“Could they give money to their own organization? These are the types of specifics shareholders would like to look at,” said Anne Sheehan, who is the chair of the U.S. Security and Exchange Commission’s investor advisory committee, which makes recommendations for the agency to consider but does not represent its views.

“The conflict could be huge and they benefit on both sides.”

A spokesman for We Company, which rents out workspace to clients under short-term agreements, declined to comment beyond its IPO filing.

SELF-DEALING

Neumann has entered into several transactions with the We Company over the years, making the company a tenant in some of his properties and charging it rent. He has also secured a $500 million credit line from banks using company stock as collateral.

The We Company also revealed on Wednesday it plans to go public with an all-male seven-member board of directors, a practice major investors such as BlackRock Inc BLK.N frown upon. BlackRock, the world's largest asset manager, encourages companies to have at least two women directors on their board, according to its guidelines for corporate ballots released this year.

“Given the fact that this is the first time in history that boards of directors of S&P 500 companies have at least one woman on the board, it would be very unusual for a company to go public today without having diversity of gender on the board,” said Steve Balet of corporate governance advisory firm Strategic Governance Advisors.