Hong Kong is contemplating ‘dual-class’ share listings for non-tech corporations, says official

Hong Kong is considering allowing non-tech companies to list on the city’s stock exchange using the “dual-class share” framework, a senior government official told CNBC on Tuesday.

A double class structure, also known as weighted voting rights, enables companies to issue different classes of shares. Typically, one class of shares has more voting rights than the other – a framework favored by many technology firms as it gives founders and insiders more control.

“One thing we are investigating is … regarding the secondary listing regime we have, whether the weighted voting companies in Greater China – yet not in the innovation and technology sectors – can benefit from that regime and in Hong Kong Hong Kong Secretary for Financial Services and Treasury Department, Christopher Hui, told CNBC’s Squawk Box Asia.

The Hong Kong Stock Exchange in 2018 changed its rules to allow companies from “emerging and innovative sectors” to be listed using the dual-class framework. This has helped the city attract major Chinese tech companies like Xiaomi and Alibaba to be listed in Hong Kong.

The city has been one of the world’s leading listing markets in recent years.

In 2020, the Hong Kong Stock Exchange became According to the consulting firm PwC, 154 new listings were released, grossing $ 51.6 billion. Prominent Chinese companies that debuted in the city last year include e-commerce giant JD.com and game company NetEase.

Hui said he was “very positive” about the prospect for public listings in Hong Kong and expects the momentum to continue in recent years.

So far this year, more Chinese firms have listed in Hong Kong, including Tiktok rival Kuaishou, tech giant Baidu, and streaming company Bilibili.

SPAC listings in Hong Kong

Exchanges in Hong Kong and other Asian cities are considering allowing special purpose vehicles or SPACs to be listed. They are “blank check” companies that raise funds through initial public offerings to merge with or acquire an existing private company in order to go public.

SPACs have drawn a lot of attention over the past year, and more and more companies have chosen to go public in the US using such a method.

Bloomberg reported Monday that Hong Kong is finalizing a SPAC listing framework by June to receive public feedback and is aiming for the first such deal by the end of this year.

When asked if the framework for publication is on track, the Hong Kong official said the city’s regulator and stock exchange operator have been tasked with investigating how Hong Kong can implement SPAC listings.

“I think for any new initiative for the market development idea to work, we have to find a balance and be sustainable at the same time,” said Hui.

“So we have to make sure that on the one hand we use this new trend to enlarge our market and at the same time adequately protect our investors.”