Hong Kong bourse ‘needs to create conditions’ to attract listings from technology firms
Panellists at the South China Morning Post’s ‘Redefining Hong Kong Debate Series’ say the city is missing out because it does not allow dual-class share structures popular with hi-tech firms
The rules of the main board of Hong Kong’s stock exchange should be reviewed so that Chinese technology companies with dual-class share structures could list, boosting the city’s attractiveness as a destination for firms to go public.
That was the view of panellists on Tuesday at the “Redefining Hong Kong Debate Series” organised by the South China Morning Post.
They noted that the decision by Alibaba Group Holding to list on the New York Stock Exchange in 2014, after Hong Kong regulators refused to accommodate its unique governance structure, had proved detrimental to the Hong Kong exchange’s attractiveness to technology companies.
“Hong Kong needs sufficient investor disclosure and additional listing requirements for these companies, with special clauses built in to protect public investors subscribing to the shares of a company with a dual-class share structure,” said Albert Ng, managing partner of EY Greater China.
Dual-class share structures, which run contrary to Hong Kong’s existing “one share, one vote” standard, are popular among technology companies as they enable founders and management to maintain control over the strategic direction of the company after a listing.
Ng also suggested that other measures could include time limits on special voting rights given to controlling shareholders or founders.
The panellists noted that a review of the rules on the main board should go ahead regardless of whether the exchange adopted proposals for a third board specifically targeting technology companies.
