The (re)introduction of dual-class share structures in Hong Kong: a historical and comparative analysis

ABSTRACT In April 2018, Hong Kong issued new listing rules to introduce the dual-class share structure, also known as weighted voting rights (WVR), under which a special class of shareholders' voting rights are conferred disproportionately with respect to their equity interest. The WVR was used in Hong Kong in the 1980s but was banned in 1989. The debate on the WVR was rekindled by the Alibaba event in 2013. The WVR structure has benefits and costs. Thus, Hong Kong lays down relevant supporting mechanisms, including entry requirements, disclosure requirements and safeguard requirements. The WVR regime in Hong Kong appears to be more stringent than jurisdictions that have either long allowed WVR listings, notably the United States and Canada, or recently chose to do so such as Singapore. This paper argues that the (re)introduction of the WVR regime is generally a positive development for Hong Kong, but there are still some lingering concerns.