Hong Kong Exchanges and Clearing Responds to Market Concerns on New Round of Listing Mechanism Reforms: Lower Threshold for Dual-Class Share Structure Will Not Compromise Quality of Listed Companies

Hong Kong Exchanges and Clearing is launching a new round of reforms to the listing mechanism. On March 13, HKEX’s wholly owned subsidiary, the Stock Exchange of Hong Kong, issued a consultation document seeking market opinions on a series of proposals aimed at enhancing the competitiveness of Hong Kong’s listing system. The reforms include relaxing restrictions on “dual-class shares” (shares with different voting rights) and increasing the cap on the ratio of shares with different voting rights from the current 10:1 to 20:1.

Market concerns are that these reforms may harm the interests of small and medium investors and could also lower the quality of listed companies. In response, HKEX’s listing chief Wu Jiexuan stated that the current thresholds for dual-class shares and secondary listings are significantly higher than those in other markets, which affects Hong Kong’s listing competitiveness. “The recent adjustment of these thresholds is not intended to lower the standards for listed companies. After the adjustment, the market value requirement for dual-class share companies remains well above the minimum requirements for main board listings.”