* 51 of 54 respondents against letting partners nominate
majority of board
* Most would demand up to 25 pct discount on shares if
structure adopted in HK
* Oppose dual shares giving controlling shareholders more
(Adds Alibaba comment)
By Elzio Barreto
HONG KONG, April 15 Global fund managers of
nearly $14 trillion in assets support Hong Kong's "one share,
one vote" principle, and oppose changing listing rules to allow
non-standard shareholding structures, the Asian Corporate
Governance Association (ACGA) said on Tuesday.
The association questioned 54 portfolio managers and
corporate governance officers about proposals discussed during
Hong Kong regulators' talks last year with Chinese e-commerce
giant Alibaba Group Holding Ltd, ahead of a possible listing.
Regulators dismissed Alibaba's request to allow a small
group of company insiders nominate the majority of its board,
prompting the company to consider New York for a possible
initial public offering worth over $16 billion.
In the survey, 51 respondents were against such non-standard
partnership structures where partners can nominate the majority
of a company's board of directors. Most also said they would
demand a discount of up to 25 percent on the share price of a
company using such a structure in Hong Kong.
All but one respondent also opposed the notion of two
classes of shares under which controlling shareholders have more
votes than other shareholders.
"We are pleased to see such firm support for equal treatment
of all shareholders," said ACGA Secretary General Jamie Allen in
a statement. "Any deviation from equal treatment would
compromise investor protection irreversibly and exemptions for
so-called innovative companies would likely backfire against
Hong Kong Exchanges and Clearing Ltd (HKEx), on
whose bourse Alibaba sought to list, did not offer an immediate
When asked about Alibaba's partnership structure in
particular, 38 respondents said it would have a "negative
valuation effect" on the company, with 20 saying they would
apply "governance discounts" ranging from 5 percent to 50
"We're not against Alibaba listing in Hong Kong," Allen said
in a briefing. "We simply don't support its request to list with
a special partnership structure that undermines the one share,
one vote and investor protection in Hong Kong."
An Alibaba spokeswoman said in a statement the company
supports Hong Kong as a place for entrepreneurs, and that it
welcomes views consistent with that development.
"We respect the policies of Hong Kong and will continue to
pay close attention and support the process of innovation and
development here," the spokeswoman said.
The association sent the survey in December to more than 70
members, most of whom were institutional investors headquartered
or with offices in Hong Kong, but also based in New Zealand,
Europe and North America. It compiled the results in the first
quarter of 2014.
(Editing by Christopher Cushing)