Singapore and Hong Kong are at it again
Singapore and Hong Kong are at it again – this time competing for the hottest Initial Public Offerings (IPO), with dual-class shares.
The Singapore Exchange (SGX) wants to be the the first Asian stock market to allow dual-class share listings whereas Hong Kong’s proposal for it back in 2015 failed to get regulatory support, but the latter is not backing down. Hong Kong plans to revisit the idea for a possible third exchange.
What’s It All About
These shares gives extra voting power to protect the management from shareholders obsessed with short-term gains. Shares in one class carries one vote, while shares in another carry multiple votes. The shares are often distributed to founding shareholders since it carries more voting rights than the ordinary shares sold to the public. Although this structure is almost unheard of in Asia, there are a few cases in Tokyo and Sydney.
Facebook Inc. has said such shares allows them to focus on long-term goals instead of being distracted by the short-term pressures of a listed company.
How Will It Benefit Singapore
With a dual-class listing, we could turn into a buzzing tech hub and rebrand our image. It’ll also be the go-to place for potential IPOs for Southeast Asian startups like Grab or India’s Flipkart. Large technology firms like Google, Facebook and LinkedIn are all listed with a dual class share structure. Singapore would then be on the Asian tech industry’s shortlist, which is a good thing for our economy. This chimes in with our move to provide funding and lighter regulation to reinvent Singapore as a fintech hub.
Public’s Thoughts On The Dual-Class Structure
As with MAS’s legal tender limit, SGX is also seeking the public’s feedback on their proposal. While the average Singaporean might not have any substantial views, industry leaders think that it is a step in the right direction. Most agree the system could inject some much-needed vitality since our exchange has seen a decline in turnover and fewer company listings.