HKEx seeks views on dual-class share structure reform after Alibaba loss

Hong Kong Exchanges and Clearing is seeking views on whether the city should change the listing rules to introduce the controversial dual-class share structure in a bid to compete with the US after losing the listing of Alibaba to New York and draw technology firms to list here.

"Almost 25 years have passed since the restriction on weighted voting right structures was implemented in the listing rules," said David Graham, HKEx chief regulatory officer and head of listing, adding the time is right to review the issue though he said the exchange has no position on the matter. It may keep the rule if the consultation showed opposition to the change. If the proposal garners supports, it will have a second consultation on how to implement it.

The exchange started consultations yesterday on the change which would allow companies such as mainland e-commerce giant Alibaba, London-listed Jardine Matheson and US-listed English football club Manchester United to have special shareholding structures to list here.

These firms have dual-class share structures that allow one class of shareholders to have more rights than others, a practice banned in the local stock exchange since 1989.

Christopher Cheung Wah-fung, legislator for the financial services sector, said HKEx needed to give details on how to protect the interests of retail investors before the public could decide if it would support the rule change.

A spokesman for the Securities and Futures Commission said the regulator "welcomes the release of the exchange's paper dealing with an issue which has given rise to widespread views and commentary in Hong Kong and further afield. We express no views on the merits of allowing weighted voting rights in whatever form".