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Singapore Exchange accepts dual-class shares to attract startup listings

Written by Zhao Xiaochun Published on   2 mins read

SGX’s reform will put it on par with its US rivals NYES and Nasdaq, as well as its Asian competitors Hong Kong and Mainland China.

Singapore Exchange has approved its largest IPO rules reform by giving green light to companies with dual-class shares to list on its main board.

The move comes as part of the city-states plan to revamp its image as a fintech and economic hub in Asia.

“SGX today joins global exchanges in Canada, Europe and the US where companies led by founder-entrepreneurs who require funding for a rapid ramp-up of the business while retaining the ability to execute on a long-term strategy, are able to list. Investors who understand and agree with the business model and management of DCS companies will also have more choice,” said Loh Boon Chye, CEO of SGX, in a statement.

The dual-class share structure is favored by many tech companies such as Alibaba, JD, and Baidu, as it gives companies’ top executives weighted voting power to implement a long-term strategy without bearing pressure from shareholders who seek a short-term return.

SGX’s reform will put it on par with its US rivals NYSE and Nasdaq, as well as its Asian competitors. Two months earlier, Hong Kong has paved way for tech companies to list on HKEX, allowing companies with different voting rights to go public in the city. Smartphone manufacturer Xiaomi has filed for an HK IPO and will be the first to go public under the new framework.

Compared with HKEX’s dual-class listing rules which apply to firms with a market capitalization of over HK$10 billion (US$1.27 billion), SGX accepts companies valued at S$300 million (US$219 million) with dual-class shares to list.

Mainland China is also bolstering its stock markets but with a different approach. The home country of many of the world’s most valuable companies has introduced this month the trial rules for secondary home listings via the issuance of financial certificate CDRs. Search giant Baidu is assessing the possibilities to list in A-share market by issuing CDRs, according to its SEC filing.

According to SGX, the rules follow two rounds of public consultations. To address specific risks associated with DCS, safeguards include:

  1. Requiring an enhanced voting process where all shares carry one vote each regardless of class, for the appointment and removal of independent directors and/or auditors, variation of rights attached to any class of shares, a reverse takeover, winding-up or delisting.
  2. Requiring the majority of the audit committee, the nominating committee and the remuneration committee, and each of their respective chairman, to be independent directors.
  3. Capping each multiple voting (MV) share at 10 votes a share and limiting the holders of MV shares to named individuals, or permitted holder groups whose scope must be specified at IPO.
  4. Requiring sunset clauses where MV shares will auto-convert to ordinary voting (OV) shares under circumstances the company must stipulate at the time of the IPO.


Editor: Ben Jiang



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