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

Comments from SGX directors suggest that the company will not let the fear of missing out guide its decision.
Comments from SGX directors suggest that the company will not let the fear of missing out guide its decision.PHOTO: ST FILE

Directors will take time to fully weigh issues even as rival HK eyes new board for such listings

The Singapore Exchange (SGX) is still some time away from deciding if companies with dual-class share structures should be allowed to do primary listings here, its directors said yesterday.

Chairman Kwa Chong Seng said at its annual general meeting (AGM) yesterday: "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."

Mr Kwa was responding to a question from a shareholder who asked if such a structure - where certain shares have higher voting rights than others - is unavoidable, given that SGX's rival in Hong Kong has reconsidered its ban.

The idea of using dual-class share structures to woo more listings from company founders who want to keep their firms tightly controlled has met with fierce criticism from fund managers and corporate governance activists here and abroad.

Hong Kong Exchanges and Clearing encountered strong opposition after it started a consultation in June on the launch of a third board that could allow companies to list with dual-class share structures.

Comments from SGX directors yesterday suggest that the company will not let the fear of missing out guide its decision.

Chief executive Loh Boon Chye clarified that he wants time for market players to better understand dual-class shares.

NO NEED TO BE HASTY

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.

SINGAPORE EXCHANGE CHAIRMAN KWA CHONG SENG

"I think we are better off with existing companies that already have dual-class seeking a listing here," he said, noting that existing rules allow a company with such a structure whose primary listing is elsewhere to seek a secondary listing here. "Whether you have a primary dual-class share structure 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."

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

Earlier, it had said that it would give an update on the dual-class share issue before the year was up. Mr Loh said yesterday that it would be difficult to commit to a time-frame given that SGX RegCo, the bourse's newly formed regulatory unit, began operations only last Friday, so integration would take time.

Mr Kwa added: "We're still evaluating the results (of our public consultation) because we still get people feeling very strongly about it."

Another shareholder questioned why shareholders should have to bear the cost for two boards of directors with the incorporation of SGX RegCo, which reports to a new, independent board.

"We tried to keep it small. I would have preferred a three-person board," said Mr Kwa, noting however that the Monetary Authority of Singapore had preferred five.

Mr Loh told investors that SGX is focused on organic growth rather than acquisitions for now, because valuations for market data assets are expensive.

All resolutions were passed at the AGM. Held at the Suntec Singapore Convention and Exhibition Centre, it was attended by 667 shareholders.

A version of this article appeared in the print edition of The Straits Times on September 22, 2017, with the headline 'SGX says 'still evaluating' feedback on dual-class shares'. Print Edition | Subscribe