Hong Kong is considering ‘dual-class’ share listings for non-tech firms, says official

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Hong Kong is considering whether to allow non-tech companies to list on the city’s stock exchange using the “dual-class shares” framework, a top government official told CNBC on Tuesday.

A dual-class structure, also known as weighted voting rights, allows companies to issue different classes of shares. Typically, one class of shares have more voting rights than the other — a framework favored by many tech firms as it gives founders and insiders more control.

“One thing that we’re looking into is … in terms of the secondary listing regime that we have, whether the Greater China companies with weighted voting rights — and yet not in the innovation, technological sector — can benefit from this regime and come to list in Hong Kong,” Christopher Hui, Hong Kong’s secretary for financial services and the treasury, told CNBC’s “Squawk Box Asia.”

The Hong Kong exchange in 2018 amended its rules to allow companies from “emerging and innovative sectors” to list using the dual-class framework. That has helped the city to attract major Chinese tech companies, including Xiaomi and Alibaba, to list on the Hong Kong stock market.

The city has been among the world’s top markets for listings over the last few years.

In 2020, the Hong Kong stock exchange saw 154 new listings that raised $51.6 billion, according to data compiled by consultancy PwC. Prominent Chinese companies that made their debut in the city last year include e-commerce giant JD.com and gaming company NetEase.

Hui said he’s “very positive” about the outlook for public listings in Hong Kong, and expects the momentum in the last few years to continue.

So far this year, more Chinese firms have listed in Hong Kong, including Tiktok rival Kuaishou, tech giant Baidu and streaming company Bilibili.

SPAC listings in Hong Kong

Stock exchanges in Hong Kong and other Asian cities are considering allowing the listings of special purpose acquisition companies or SPACs. They are “blank check” companies that raise money through IPOs with the intention of merging with or acquiring an existing private firm in order to take it public.

SPACs have gained much attention in the past year, with an increasing number of companies choosing to go public in the U.S. using such a method.   

Bloomberg reported Monday that Hong Kong is getting ready a SPAC listing framework by June to gather public feedback, and is targeting the first such deal by the end of this year.

Asked whether the framework is on track for release, the Hong Kong official said the city’s regulator and exchange operator have been tasked to study how Hong Kong can implement SPAC listings.

“I think for any new initiative, for market development idea to fly, we need to strike a balance, at the same time it has to be sustainable,” said Hui.

“So we have to make sure that while on the one hand, we are taking advantage of this new trend to grow our market, yet at the same time have our investors duly protected.”

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