The head of Hong Kong’s stock market operator has questioned the city’s commitment to the “one share, one vote” principle, in his clearest comments to date following Alibaba’s decision to take its blockbuster listing to the US.
Charles Li, chief executive of Hong Kong Exchanges and Clearing, wrote on his blog yesterday that inaction on regulatory reform “appears to have helped nobody”, yet had “hurt Hong Kong’s competitiveness in attracting new economy companies”.
“?‘One share, one vote’ is a rule that ensures those who have more of a firm’s share capital have more influence over the company; that is: money is king,” wrote Mr Li.
“But investor protection is a much bigger concept; it is an overarching series of rules and regulations aimed at ensuring investors, particularly public investors, are as protected as possible from wrongdoing by those in power. In other words, investor protection is the end, and ‘one share, one vote’ is only one of the many means.”
Debate has been raging in Hong Kong in the past six months over whether the city needs to overhaul its current listing rules to allow either dual-class share ownership, or partnership structures that allow company founders to control board nominations without a majority shareholding. Many Chinese internet and technology companies have chosen to list in the US due to the more relaxed rules on voting rights and on profitability. Many now worry that Hong Kong is missing out as Chinese tech companies look to go global.
The discussion was sparked by the prospect of attracting Alibaba, China’s biggest ecommerce site, to Hong Kong for its initial public offering – which may yet be the largest in history. After months of negotiations, Alibaba said last month it would list in the US, where rules allow for the kind of partnership structure it is seeking.
Mr Li is among those eager to see a formal consultation over whether Hong Kong needs new rules to make sure it remains a global centre for capital raising, especially as more privately owned Chinese companies seek stock market listings.
In his blog post, Mr Li says he supports those in favour of change, as the issue of weighted share structures was of “limited relevance” to investors.
“It is difficult to conclude that US regulators chose to allow the dual-class share regimes because they do not care about investor protection. The success to date by firms like Google and Facebook makes it difficult for us to conclude that US investors have lost out as a result of such structures,” wrote Mr Li.
李小加是是香港交易及结算所有限公司(Hong Kong Exchanges & Clearing)的首席执行官。昨天，他在博客上表示，监管改革上的不作为“似乎并无益于目前香港市场中的任何一方，但它却实实在在影响香港市场吸引新经济公司的核心竞争力”。