HKEx Scraps Dual-Class Listings Proposal After Regulator Rebuffby
Hong Kong’s stock-exchange operator scrapped a move to introduce weighted voting rights after opposition from the city’s financial regulator.
The listing committee of Hong Kong Exchanges & Clearing Ltd. won’t proceed to a formal consultation on allowing dual-class listings, nor finalize its draft proposal, after considering the views of the Securities and Futures Commission, HKEx said in a statement on its website. The watchdog said in June that it didn’t support the plan because there was no assurance such companies would treat shareholders fairly.
“Whilst the Listing Committee continues to believe that this is an important topic for Hong Kong and one that deserved the full attention of the Hong Kong market, it does not believe that progress can be made, currently, on a workable proposal for the primary listing of companies with weighted voting right structures in Hong Kong," the exchange operator said.
The Hong Kong bourse operator had sought to loosen restrictions on shareholder voting rights that spurred Alibaba Group Holding Ltd. to pick the U.S. over Hong Kong for its initial public offering. The lack of a class-action legal system has made the SFC reluctant to amend the rules because less redress is available to small shareholders. In the U.S., companies with more than one type of share, including Google Inc. and Facebook Inc., are subject to more stringent reporting requirements and shareholders have the ability to band together on lawsuits.
HKEx will keep the matter under review, it said.