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Jan 23, 2018

Singapore Exchange to allow dual-class share structure companies to list

Move comes one month after Hong Kong announced similar proposal

Singapore Exchange (SGX) has said it will allow companies with dual-class share structures to list, a month after Hong Kong announced a similar proposal, as competition between markets for technology listings becomes ever fiercer.

SGX will consult on the rules this quarter and expects the first listing ‘soon after,’ chief executive officer Loh Boon Chye commented on Friday at the company’s quarterly earnings briefing.

Loh said in a statement: ‘Singapore is making huge efforts to transition into the new economy and we are already recognized as the landing hub for start-ups. Some companies might need a capital structure that supports the rapid scaling up of their business. Dual-class shares are one way to do so, but not the only way.’

The competition between the two Asian exchanges comes as some of the world’s largest technology companies – from Alibaba Group to Facebook – use stock with enhanced voting power to protect the influence of their founders and management. Such structures have faced opposition from investors, which fear their rights could be eroded amid corporate governance concerns.

The Monetary Authority of Singapore said in a statement issued on Friday that it supported SGX’s decision to allow dual-class share structures, and that it would review the safeguards the exchange will propose to mitigate the risks involved.

Hong Kong Exchanges & Clearing proposed allowing innovative companies to list with dual-class shares as part of a package of measures released last month. Its plan would see each multiple-vote share represent no more than 10 times the votes of ordinary shares, and only companies with a focus on new technologies would be eligible.

Founders and executives would, in essence, need to demonstrate how their contribution merits the structure.