Jurisdiction - Hong Kong
Reports and Analysis
Hong Kong – The HKEx’s Issue Of A Concept Paper On Weighted Voting Rights.

22 September, 2014


On 29 August 2014 the HKEx issued a concept paper seeking views from market participants on whether the HKEx should allow governance structures that give certain persons voting power or other related rights disproportionate to their shareholding interest (which it refers to as “weighted voting rights”). Hong Kong’s “one-share, one-vote” policy has been in place since 1989, with only one HKEx-listed company (Swire Pacific Ltd.) having two classes of shares that carry different voting rights, a structure that it implemented in 1972. The paper is, in part, a reaction to the perceived loss of the Alibaba IPO to the United States due to Hong Kong regulators’ reluctance to allow Alibaba to adopt a weighted voting rights structure. The paper noted that of the 12 listings of mainland Chinese companies in the United States in 2014, nine of those employed weighted voting rights structures.
The paper does not itself recommend any particular rule changes or methods of implementing weighted voting rights for HKEx-listed companies, and the HKEx made a point of highlighting that it has not itself formed any view on the issue. Instead, the HKEx indicated that, subject to the views received being supportive of such rights, the HKEx would then conduct a formal consultation process on the details of the scope and language of any proposed changes to its rules. The paper did not mention whether, if weighted voting rights were ultimately permitted, the HKEx intended to allow companies that are already listed on the HKEx to implement such structures.

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