Singapore Bourse’s Advisory Group Gives a Nod to Dual-Class Shares

Singapore Exchange has paved the way for the bourse to allow companies to be listed with different classes of shares, in a bid to attract initial public offerings.

"A DCS ("dual class share") structure may only be permitted if a listing applicant has a compelling reason to adopt such a structure," SGX's Listing Advisory Committee ("LAC") said in a report published on Monday, adding the one-share-one-vote would remain the default for new listings.

It said the DCS structure would be subject to corporate governance safeguards. Critics have warned of potential abuse by corporate insiders if they are allowed to have extra voting power than ordinary shareholders.

SGX set up its independent advisory group comprising senior bankers, lawyers and chief executives of companies in October 2015 to help it formulate listing policies and review applications.

Singapore amended its laws in 2014 to allow dual-class structures. This came after Manchester United chose to list its shares in New York in 2012 after initially considering SGX. Difficulties in obtaining approval for its DCS offer in Singapore was cited as a major reason for the move to the US.

The LAC said the envisaged DCS structure listing framework is aimed at boosting SGX's attractiveness as a listing venue. "Unlike many other countries, Singapore does not have a vast hinterland providing a continuous pipeline of IPO-ready listing applicants," the committee said.

The move by the group is in contrast to Hong Kong's securities regulator which this year rejected draft proposals by Hong Kong Exchanges and Clearing Ltd to change listing rules that saw the bourse lose Alibaba Group Holding's record $25 billion IPO to New York last year.

 

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Reuters