Opinion | Alibaba's new proposal may still hurt shareholders
The mainland e-commerce giant is seeking a majority say on future board nominations
Mainland e-commerce giant Alibaba Group's latest proposal to cement founder Jack Ma Yun's control of management after a possible listing in the city might be more acceptable to objectors than a dual shareholding structure. But it is not a perfect solution.
Senior sources at the stock market regulators - the Securities and Futures Commission and Hong Kong Exchanges and Clearing - have told White Collar categorically that they would reject any application for a dual share structure to allow Ma and Alibaba's management to keep control of the company after a listing.
It is a logical position. Allowing it would go against similar requests from Jardine Matheson in the 1990s and the application last year from English football club Manchester United. Dual share structures, permitted in the US but not Hong Kong, give some shareholders more voting rights than the others.
Regulatory sources said they would not consider a dual-shareholding structure because many investors did not like it.
"One share, one vote", is what fund managers and investors say is fair and equal in Hong Kong, as do the regulators.
Sources at Alibaba say that this line of argument is spurious because the firm is not asking for a dual class structure.
What it wants is to be allowed a partnership structure in which senior management would have the power to nominate a simple majority of the board members and then have shareholders vote on those nominations.