The window for initial public offerings is closed for the typical venture-backed company, and it's not hard to understand why. As Marty Lipton of Wachtell, Lipton, Rosen & Katz has warned, shareholder activism has debased the role of the corporate board, shifting its function from strategic counsel to something akin to a compliance watchdog.

In addition, Chancellor Leo Strine Jr. of the Delaware Court of Chancery, recently wrote of the pernicious effect that the short-term focus of institutional investors, which hold an outsize proportion of publicly traded securities, is having on long-term corporate health. Strine's article "Can Corporations Be Managed for the Long Term Unless Their Powerful Electorates Also Act and Think Long Term?" has been mostly ignored in the news media.

It is in the context of Lipton's and Strine's ominous observations that one is able to understand entrepreneurial reticence toward going public. The number of publicly listed companies in the U.S. is in a steep decline. There were 5,091 pubcos listed on major exchanges as of February, a 42% drop from the 8,823 in 1997.

We suggest two simple -- and utterly doable -- fixes to help pry open the IPO window, both fixes falling into the category of shareholder rights.

First, the Securities and Exchange Commission should empower the shareholders of companies going and/or currently public by allowing them to include class arbitration clauses in their charters.

The prevalence and profitability of nuisance litigation has caused undue anxiety in the boardroom about regulatory compliance, and is largely responsible for the change in board members' roles lamented by Lipton. Sanity and collegiality might return were shareholder disputes subjected to arbitration versus multimillion-dollar trials.

The problem is that the SEC won't allow it. In 1990, a Pennsylvania corporation, in the process of registering its IPO, disclosed to the SEC that its charter contained a clause requiring all shareholder disputes to be submitted to arbitration. In response, the SEC staff refused to accelerate the effectiveness of the registration statement, and the clause was subsequently removed. And no company has since made a similar attempt. The fact is that arbitration clauses, sensitively drafted, have the salutary effect of curbing the power of professional litigants to extort unmerited settlements while preserving the right of injured parties to recompense if wronged.

If adopted, such provisions have the potential to restore billions to companies' bottom lines, with concomitant fillips to employment and tax revenue. The ban, when imposed, resulted from informal agency action, and presumably it can be reversed just as easily, and it should be.

Secondly, and consistent with Strine's case, shareholder rights should include election of charter provisions tied to long-term performance. Much market mischief owes to the pressure institutional investors place on boards and management to produce short-term gains at the expense of sustainable corporate policy. Tying share votes to the length of time shares have been held would mitigate this impulse by rewarding long-term shareholders with a greater say on corporate policy.

This can be accomplished by empowering pubco holders to endorse the establishment of two classes of shares. Such is the case today with, for example, family- and founder-controlled companies (New York Times Co.) reserving voting control.

But there is a more sensitive and democratic fix. Class A shares would be in every respect like Class B shares except that their vote would be tied to the holding period of the shares' owner. Class A shares held for an unbroken period of ownership exceeding one year would enjoy two votes per share; Class A shares held for more than two years have three votes per share; and so on up to six votes per share. Every Class A share would be convertible at will to a Class B share upon sale. The mechanics of qualifying for the holding period would be set forth in the proxy statements; if investors don't like the plan, they don't buy the stock.

These solutions are hardly panaceas, but these simple steps can be taken immediately to improve corporate governance and -- possibly -- breathe new life into the moribund IPO market. Public ownership of corporate equity is both beneficial and essential to the health of the American economy. It's time to continue the conversation Lipton and Strine have triggered.

Joseph W. Bartlett is of counsel in Sullivan & Worcester LLP's New York office. Robert S. Hatfield III is a first-year associate in the firm's Boston office.