1. Introduction
Both the Singapore and Hong Kong markets are keenly watching in anticipation the coming into play of dual class shares ('DCS') and the effect it will have on the growth of the stock market scene in Asia.
While awaiting the results of the consultation and the publication of the exact requirements, in view of the adoption in Hong Kong, it is timely to consider the proposals in both markets.
Clients who wish to discuss the feasibility of DCS structures should contact Farhana Siddiqui and Polly Chu for a detailed discussion.
2. Proposals in Singapore
As mentioned previously, on 16 February 2017, Singapore Exchange Limited ('SGX') released a consultation paper on the 'Possible Listing Framework for Dual Class Share Structures', seeking public views regarding broad policy considerations on whether to introduce a listing framework for DCS structures in Singapore ('DCS Framework'), and the possible proposals and safeguards should a DCS Framework be introduced. Currently, companies with primary listings in markets considered by the SGX to be 'developed markets' can apply for secondary listing on the SGX.
Under a DCS structure, certain shareholdings are given voting power or other related rights disproportionate to their shareholding. Shares in one class carry one vote ('OV shares'), while shares in another class carry multiple votes ('MV shares').
While the findings of the consultation are not available yet, we have set out a general overview of the proposed DCS Framework and possible safeguards to be adopted in Singapore and the position in Hong Kong in the comparative table in this update.
3. Proposals in Hong Kong
The Stock Exchange of Hong Kong Limited ('SEHK') had in June 2017 released a concept paper on the 'New Board', which similarly discussed the possibility of DCS structures for companies listed on the SEHK. The DCS structures were referred to as weighted voting rights ('WVR') structures within the concept paper.
The consultation conclusions on the 'New Board' concept paper were published in December 2017, and an overview of these conclusions is provided in the comparative table below.
SEHK proposes to facilitate the listing of high growth and innovative companies with a WVR structure through a new chapter in the Rules Governing the Listing of Securities on SEHK for the main board (the 'Main Board Listing Rules'). They are in the process of finalising the details of the proposals and have commenced drafting proposed amendments to such rules to put the proposals into effect. SEHK expects to proceed with the formal consultation on the proposed rule amendments in the first quarter of 2018.
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