Commentary

Debate on dual-class shares should centre on safeguards

Balanced governance is key, given inevitability of this structure here

Today, the dual-class share structure is seen in high-tech and social media companies like Google, Facebook and Groupon. The primary reason to justify the structure of these companies is the need for "insiders", or founders, to implement a long-term
Today, the dual-class share structure is seen in high-tech and social media companies like Google, Facebook and Groupon. The primary reason to justify the structure of these companies is the need for "insiders", or founders, to implement a long-term goal for the company and the possible impediments that short-termism may pose to investors, says the writer.PHOTOS: AGENCE FRANCE-PRESSE, REUTERS, NEO XIAOBIN

By almost all accounts, dual-class shares (DCS) will soon be part of the local investment landscape. The Companies Act was amended in early 2016 to allow companies to set up such capital structures; the Singapore Exchange's (SGX) Listings Advisory Committee then recommended allowing DCS companies to list here; and then SGX sought public feedback on the feasibility of introducing DCS here as well as what safeguards, if any, might be required.

Clearly then, local officialdom is serious about bringing in DCS companies. For Singapore to be a vibrant capital market, the import of DCS appears to be essential as investors cannot be denied their right to participate in these firms.

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A version of this article appeared in the print edition of The Straits Times on March 31, 2018, with the headline 'Debate on dual-class shares should centre on safeguards'. Print Edition | Subscribe