Keywords: HKEx, Concept Paper, WVR Structures,
Hong Kong Exchanges and Clearing Limited (HKEx) recently
published its long-awaited "Concept Paper – Weighted Voting
Rights" ("Concept Paper") to seek views on
whether weighted voting right structures ("WVR
Structures") should be allowed for companies listed or
intending to list on HKEx, and if so, to what extent?
Responses to the Concept Paper should be submitted on or before
30 November 2014.
WVR Structures refer to governance structures that grant various
persons voting power or other related rights disproportionate to
their shareholdings. They can take various forms. A common form
used in the United States is listing with dual-class share
structures with unequal voting rights. Also, some companies adopt
structures which give existing controllers enhanced or exclusive
rights to appoint directors (usually a majority) to the board of
Current Position in Hong Kong
It is stated in the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited ("LR") that a
company with shares which have voting power that does not bear a
reasonable relationship to the equity interest of those shares when
fully paid is not allowed to be listed on HKEx. This restriction is
subject to any "exceptional circumstances" agreed with
HKEx1. However, HKEx has never applied this exception to
list any company so far. Also, this restriction continues to apply
Accordingly, WVR Structures are currently not permitted in Hong
Kong and companies listed or seeking a listing in Hong Kong are
only allowed to adopt the "one-share, one-vote"
governance structure. This means that a shareholder cannot have
greater voting power than another if both have the same amount of
equity in a company.
The major purpose of exploring the possibility of allowing WVR
Structures is to enhance the competitiveness of Hong Kong as a
listing venue, for mainland Chinese companies' listings as well
as international listings, as WVR structures are allowed in some
jurisdictions such as the United States.
At this stage, HKEx only aims to seek views on the concept of
WVR Structures and is not putting forward any specific LR amendment
for consultation. If there is support for a material amendment to
the LR in order to adopt WVR Structures, a second stage formal
consultation would be required for the LR amendment including
details of the scope and language of any proposed changes.
We will closely monitor the latest developments in this matter
and will issue updates as and when appropriate. In the meantime,
please do not hesitate to contact us if you require any advice or
1 Please refer to LR 8.11 which states:
"The share capital of a new applicant must not include shares
of which the proposed voting power does not bear a reasonable
relationship to the equity interest of such shares when fully paid
("B Shares"). The Exchange will not be prepared to list
any new B Shares issued by a listed issuer nor to allow any new B
Shares to be issued by a listed issuer (whether or not listing for
such shares is to be sought on the Exchange or any other stock
exchange) except: 1. in exceptional circumstances agreed with the Exchange;
or 2. in the case of those listed companies which already have B
Shares in issue, in respect of further issues of B Shares identical
in all respects with those B Shares by way of scrip dividend or
capitalisation issue, provided that the total number of B Shares in
issue remains substantially in the same proportion to the total
number of other voting shares in issue as before such further
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