Secondary listings of dual-class share companies allowed on SGX
SINGAPORE — Companies with a dual-class share structure that are primary listed in “developed markets” can seek a secondary listing on Singapore Exchange (SGX), SGX said today in response to queries raised during the dual-class share public consultation process.
SINGAPORE — Companies with a dual-class share structure that are primary listed in “developed markets” can seek a secondary listing on Singapore Exchange (SGX), SGX said today in response to queries raised during the dual-class share public consultation process.
SGX’s secondary listing framework differentiates companies into two groups based on their home exchanges. For companies that are listed on any of the 22 markets the international index-providers FTSE and MSCI classify as “developed markets”, SGX does not impose additional post-listing conditions except a requirement that the companies make continuous disclosures via SGXNet of all announcements made to the home exchange.
These companies must also maintain their primary listing on the home exchange. The classification considers a jurisdiction’s legal, regulatory and enforcement framework. The home exchange of each company will maintain primary regulatory oversight of the issuer.
Dual-class share structures are generally characterised by two classes of shares where one class of shares with only one vote per share — common shares usually offered to public investors - would be subordinated to a superior class of shares which entitles the holder to multiple votes per share — usually held by founding shareholders.
In addition, all companies applying for a secondary listing are subject to the listings review process and must satisfy SGX’s suitability criteria. Initial secondary listing applications from dual-class share companies will be referred to the independent Listings Advisory Committee. Last year, the committee advised on SGX’s proposed listing framework for dual-class share structures.
The committee, which was established in 2015, enables SGX to draw upon the views of a panel of independent and experienced market professionals who provide advice on SGX’s listing policies, as well as listing applications to the SGX Mainboard which meet certain referral criteria. It is chaired by Mr Gautam Banerjee, chairman, Blackstone Singapore.
“The secondary listing of companies, including dual-class share companies, in Singapore provides investors with more choice and enables these shares to be traded during the Asian time zone. Should a dual-class share company secondary-list on SGX, it could enhance overall market knowledge and familiarity with the risks and benefits of DCS companies,” said Mr Loh Boon Chye, CEO of SGX.
“‘Developed market’ jurisdictions are those whose frameworks are acceptable to us; more than 10 of these allow dual-class share listings and each has its own way of dealing with the associated risks. While the existing secondary listing framework accommodates dual-class share companies, this does not presume that we will adopt a primary dual-class share listing framework. We are still evaluating the feedback received and target to update the market before the year-end,” said Mr Tan Boon Gin, CEO of Singapore Exchange Regulation.
The regulatory unit Singapore Exchange Regulation is conducting a “strategic review” of rules governing the stock exchange to ensure that the rules remain appropriate to the market.
SGX has seen a string of delistings in the past year. The lack of liquidity and the cost of compliance have been cited as reasons by some firms for delisting. Allowing dual-class share structures could boost liquidity, say experts. Google, Snapchat, Alibaba and Facebook are some companies with dual-class structures.
On Thursday (July 27), SGX reported a fall in net profit of 3 per cent from the previous year to S$340 million. For the financial year ended June 30, revenue decreased 2 per cent to S$801 million. The board of directors proposed a final dividend of 13 cents per share, bringing the total dividend to 28 cents per share, unchanged from the previous year.