Abacus | Why Hong Kong’s plan to attract the next Google is a great leap backward
Proposal to allow companies with rigged governance structures to float on the stock exchange would undermine ordinary shareholders – and encourage the groupthink that already bodes ill for the Silicon Valley giant
Hongkongers have long felt that their government runs the territory for the benefit of big business, with little thought for the well-being of the city’s ordinary inhabitants. But the Hong Kong government has never been quite so blatant about its contempt for the interests of ordinary people as today.
Specifically, the stock exchange is proposing to set up a new board that would accept listings from companies that either allow corporate managers to stuff boards with their own chosen directors, or which operate dual share classes that deny minority shareholders equal voting rights. Either way, the effect will be the same: ordinary shareholders will have no oversight over company managers and no ability to hold executives to account.
Government officials and the stock exchange’s bosses say allowing such rigged governance structures is necessary to attract up-and-coming new technology companies to list in the city.
They argue that similarly rigged shareholder structures are allowed in other markets, and that they are commonplace among Silicon Valley’s technology titans. The idea there is that selective governance arrangements free the big thinkers behind tech companies from the short-term, return-focused demands of stock market investors, allowing them to pursue futuristic “moonshot” projects to develop the world-changing technologies of the future.