Chan softens line on reform of IPO rules

Any change to rules governing Hong Kong's financial system must enshrine appropriate checks and balances that safeguard the interests of all market participants, Secretary for Financial Services and the Treasury Chan Ka-keung said yesterday.

"For a new structure to come about, you have to first convince the market to believe in it. If a consultation on listing reform takes place, it needs to provide very specific recommendations to protect the interests of company management, big shareholders and small shareholders," he said at a year-end briefing.

Chan's tentative support for the creation of a listing reform consultation committee appears to be a shift from his statements two months ago, when he said Hong Kong's rules on initial public offerings (IPOs) work fine and the stock exchange had no plans to consult the market on reforms.

Potential reform of the city's listing rules became an issue in October after Alibaba Group failed to convince Hong Kong regulators to allow it to list with a so-called partnership structure that gives a coterie of top executives the power to nominate most of the firm's board members.

The collapse of talks to secure the potential US$15 billion share sale, which may instead happen in New York, sparked handwringing among regulators who insisted they would not abandon the principle of "one shareholder, one vote" despite competition from the US where "dual-class" shares are permitted.