HKSE to consult on new board for dual-class shares

The Hong Kong bourse is looking to establish a new trading board for pre-profit companies and firms with weighted voting rights structures, in a bid to attract technology and so-called new economy companies to list there.
The Hong Kong bourse is looking to establish a new trading board for pre-profit companies and firms with weighted voting rights structures, in a bid to attract technology and so-called new economy companies to list there.PHOTO: BLOOMBERG

HONG KONG • The Hong Kong Stock Exchange will begin a public discussion next month over whether to establish a trading board for young companies, and firms with non-standard share structures, the bourse's chief executive officer said yesterday.

The discussion comes amid general debate about Hong Kong's corporate governance rules and attractiveness as a listing destination, sparked by Chinese e-commerce firm Alibaba Group favouring New York over Hong Kong for its record US$25 billion (S$34.6 billion) initial public offering (IPO) in 2014.

Hong Kong was the world's biggest IPO venue last year but has struggled to attract technology and so-called new economy companies because of its profitability requirements and ban on weighted voting rights, which many tech companies prefer.

Mr Charles Li, CEO of Hong Kong Exchanges and Clearing (HKEX), said the new trading board will complement the main board and growth enterprise market, and allow the bourse to attract prospective new economy listings.

"We have not been the exchange of choice, the market of choice of new economy and emerging companies. We are now addressing those issues head on," said Mr Li.

He said the bourse aims to begin consultations next month, which would address two principle issues: pre-profit companies and firms with weighted voting rights structures.

HKEX's previous effort to allow such firms to list on its main board failed to win support from the Securities and Futures Commission. The regulator, however, has said it supports public discussion on HKEX's new proposal. The new board will boost Greater China's private equity market, allowing private equity and venture capital investors to list firms in their home market, where valuations can be higher than in New York.

Mr Li said the bourse is also planning a private market for unlisted firms using blockchain distributed ledger technology, which could potentially launch before the new board is set up.

REUTERS

A version of this article appeared in the print edition of The Straits Times on May 27, 2017, with the headline 'HKSE to consult on new board for dual-class shares'. Print Edition | Subscribe