Singapore took another step towards making dual-class share structures a reality in the city-state, with the Singapore Exchange Ltd (SGX) kicking off a public consultation on the controversial market mechanism. SGX, which has seen a slump in initial public offerings (IPOs) in recent years, said yesterday the two-month long public consultation would look into admission criteria and safeguards against possible risks.
The structure of dual-class shares, which typically gives one set of shareholders greater voting rights than others, has been favoured by many owners of new age industries such as technology, with the extra voting power given to top executives seen as protection against pressure for short-term returns.
But the structure has also come in for criticism from corporate governance activists, who have warned of its potential abuse by company insiders. The criticism is a key reason why the structure is still not permitted in Hong Kong, despite a years-long debate sparked by Chinese e-commerce giant Alibaba Group’s decision more than two years ago to make its record US$25bil IPO not in Hong Kong but in New York where dual-class shares are allowed.
SGX also lost out on the IPO of Manchester United to New York in 2012 because it could not obtain approval for a dual-class share structure. Worried about its competitiveness as an IPO destination, Singapore has moved to re-examine its position on dual-class shares, and last year SGX’s Listings Advisory Committee gave the stock exchange the green light to allow companies to list with such structures.
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