December 15, 2017 / 9:20 AM / 6 months ago

Hong Kong gearing up to allow controversial dual-class shares

HONG KONG, Dec 15 (Reuters) - Hong Kong is set to allow controversial dual-class shares under rule changes to be proposed by the city’s stock exchange as it raises the stakes in its battle against New York for blockbuster Chinese initial public offerings (IPOs).

Hong Kong Exchanges and Clearing (HKEX), the city’s exchange operator, said on Friday it had begun drafting specific rule changes that will be put up for a formal public consultation in the first three months of 2018.

Dual-class shares, which typically give one set of shareholders greater voting rights than others, have been favoured by many owners of new age industries such as technology, with the extra voting power given to top executives seen as protection against pressure for short-term returns.

But they have also come in for criticism from corporate governance activists, who have warned of its potential abuse by company insiders.

Hong Kong’s proposed changes, which stem from a discussion paper published in June, come as a series of hotly-anticipated Chinese tech groups are considering their options for listing next year.

These include Xiaomi, which is hearing bank pitches on Friday for a role in an IPO expected to value the smartphone maker at at least $50 billion. (Reporting by Jennifer Hughes; Editing by Muralikumar Anantharaman)

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