March 28, 2018 / 9:26 AM / a year ago

Singapore lowers bar for proposed dual-class share listings

SINGAPORE (Reuters) - Singapore stock exchange plans to allow firms with an expected market capitalization of S$300 million ($229 million) to list with dual-class shares, versus an earlier proposed minimum of S$500 million, a move that could give the city-state an edge over rival Hong Kong.

FILE PHOTO: An SGX sign is pictured at Singapore Stock Exchange July 19, 2017. REUTERS/Edgar Su/File Photo

The new proposal, which is in line with requirements for mainboard listings, was seen to be sufficient in public consultation, Singapore Exchange Ltd said, as it looks to get ahead in the race to become the first Asian bourse to offer a structure aimed at attracting tech firms.

Hong Kong has proposed that applicants wanting to do dual-class shares listings, which allow one set of shareholders greater voting rights than others, should have a market cap of not less than HK$10 billion ($1.27 billion).

Dual-class shares are popular with owners of new technology companies, with the extra voting power given to top executives seen as protection against pressure for short-term returns.

Their introduction in Asia would put the region on a more even footing with New York, which has managed to attract more Chinese tech initial public offerings via the structure.

“There were suggestions that we should look to introduce a minimum market capitalization to attract only bigger companies but subsequent to that proposal we have received more feedback from more respondents who then suggested that there is no necessity for an additional requirement,” said Michael Tang, head of listing and product admission at SGX.

The SGX aims to have its final rules issued by the end of the second quarter and the first listing shortly thereafter.

The exchange said there was broad support for the structure in last year’s consultation, and it was now seeking feedback on proposed safeguards to address certain investor risks in a consultation open to April 27.

Dual-class shares have been criticized by corporate governance activists, who have warned that the structure could be abused by company insiders.

SGX has proposed safeguards including limiting initial holders of so-called ‘multi-vote’ shares to only directors in the company, and limiting each multi-vote share to carry a maximum of 10 votes.

Editing by Himani Sarkar

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