SGX says 'still evaluating' feedback on dual-class shares

An SGX sign is pictured at Singapore Stock Exchange.
An SGX sign is pictured at Singapore Stock Exchange.PHOTO: REUTERS

SINGAPORE - The Singapore Exchange (SGX) is still evaluating whether companies with dual-class share (DCS) structures should be allowed to do primary listings here, and this decision will take some time, its directors said on Thursday (Sept 21).

Chairman Kwa Chong Seng said: "This is very controversial. We're still evaluating the results (of the public consultation). Why is that? Because we still get people feeling very strongly about it."

Mr Kwa was responding to a question at SGX's annual general meeting (AGM), where one shareholder asked if such a structure where certain shares have higher voting rights than others is unavoidable, given that SGX's Hong Kong rival has re-considered its ban on DCS.

Mr Kwa said: "We need to be sharp and be willing to move. But at the same time we don't need to be the first ones to move. So we'll see. I'm frankly still keeping an open mind about it. We as a board at our next meeting will discuss this again. It's something we continue to look at but I don't have a definitive answer for you right now."

Speaking to reporters later, SGX chief executive Loh Boon Chye clarified that for now, he wants to allow time for market players to understand DCS better.

"I think we are better off with existing companies that already have dual-class to seek a listing here," he said, noting that existing rules allow a company with a DCS structure that is primary listed in another"developed market" to seek a secondary listing on the exchange.

"Whether you have a primary DCS or not, let's say you have it today - it's not that you have it then they will come. I don't think it works quite that way," Mr Loh said.

That said, the SGX does not actively market itself as a destination for secondary listings.

Earlier, the SGX had said that it would give an update on the DCS issue before the year is up. However, Mr Loh said on Thursday that it will be difficult to commit to a time-frame given that SGX RegCo, SGX's newly formed regulatory unit has only begun operations last Friday, so integration will take time.

All resolutions were passed at the AGM, which was attended by 667 shareholders at Suntec Convention Centre.

Mr Kwa told shareholders that SGX is focused on organic growth rather than acquisitions for now, since valuations are expensive. The exchange continues to seek to balance revenue growth with a reasonably regulated market.

In the year ended June 30, SGX's net profit fell 3 per cent to S$339.7 million on the back of a 2 per cent decline in revenue to S$800.8 million.