The Hong Kong Stock Exchange (HKEX) unveiled changes to its new listings protocol on Tuesday, as an attempt to attract hi-tech and biotech companies to upscale its position in the battle with the Silicon Valley and mainland China, when it comes to high-profile IPOs.
Hong Kong’s market operator will start accepting IPO applications under the new plan on April 30, while the first wave of companies is said to be listed as soon as June.
The amendments to the exchange’s IPO policy — the biggest such change in at least 20 years — will allow companies with “weighted voting rights” to be listed on the Hong Kong stock exchange’s main board. The structure gives certain shareholders — usually the founding members — superior voting power over others. – writes Asian Nikkei Review.
HKEX will also accept specifically biotech firms with low or no annual profit and provide easy adoption and guidance to create a secondary listing in the city of Hong Kong.
Among the listing companies, we can find the Chinese telecommunications giant Xiaomi, the largest Asian online retail market, Alibaba and many other local and international companies. Among them, a Bill Gates, and Jeff Bezos-backed start-up called Grail, a company specializing in cancer detection and treatment.
While Hong Kong frequently competed for the top spot among global IPO fund-raising centers, it was recently left behind by the U.S. and rival south-China city Shenzhen in attracting companies in emerging sectors due to its listing rules. Hong Kong has held to a “one share, one vote” principle that gives equal rights to all shareholders.
However, founders of internet-based companies such as Alibaba often hold more voting rights than ordinary investors to retain control over the company’s operations. Facebook, and Alphabet, Google’s parent company, have similar dual-class share structures in the U.S.
The adoption of dual-class listing rules in Hong Kong will give executives of “innovative” companies a maximum voting power 10 times that of other investors that meet its requirements. – writes Nikkei Asian Review.