Dual class share listings

10 July 2018 | Applicable law: Hong Kong, Singapore

Two of the main stock exchanges in Asia – the Stock Exchange of Hong Kong (SEHK) and the Singapore Stock Exchange (SGX) – have recently changed their regulations to allow companies with dual class shares (DCS) to list.

SEHK implemented the change on April 30 while the SGX introduced new rules to the Singapore Exchange Securities Trading Limited Listing Rules (Mainboard) on June 26.

The changes are made with the intention to grow the stock market scene in Asia.

In Singapore, under a DCS structure, certain shareholders are given voting rights much higher than their shareholding. Shares in one class carry one vote (known as OV shares), while shares in another class carry multiple votes (termed MV shares).

In Hong Kong’s case, the DCS structures were referred to as weighted voting rights (WVR) structures.

Essentially, these structures mean that issuers can issue different classes of shares, some which carry one vote, whilst some carry more than one vote, to protect the influence of the founders and top executives (usually the directors). The structures, often favoured by fast growing technology companies, are seen as a protection against shareholders' pressure for short term gains.

We set out in this update a table comparing the primary listing frameworks in both countries to help clients determine if they qualify for listing in either stock exchange and the conditions that come with such listings.

Clients who wish to discuss the feasibility of such structures should contact members of our Equity Capital Markets team for a detailed discussion. Their contact details can be found at the end of this update.

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This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.


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