SGX mulls over allowing dual-class shares for secondary listings: sources

THE Singapore Exchange (SGX) has held discussions with market stakeholders on the possibility of allowing dual-class shares for secondary listings, market sources told The Business Times.

Those discussions have taken place with SGX in the midst of a review on whether to allow dual-class shares for primary listings. The secondary listing framework, which smooths the path to listing in Singapore if a company is already listed on a recognised foreign exchange, could however allow the exchange to crack open the door a little before a decision on primary listings is made.

As part of plans to attract more companies to list in Singapore, especially those in the tech sector, SGX had carried out a wide-ranging public consultation on whether to allow the structure in Singapore. Following advice from the independent Listings Advisory Committee, SGX proposed certain safeguards, including imposing a "compelling reason" hurdle, a minimum market capitalisation of S$500 million and a maximum voting differential of 10 times.

The proposal for introducing dual-class shares for primary listings has met with strong opinions on both sides of the debate.

Proponents argue that allowing dual-class shares with the right safeguards is an important step to broadening SGX's appeal to issuers and to improving market vibrancy. Opponents, however, see dual-class shares as inherently detrimental to good corporate governance.

Associate Professor Mak Yuen Teen of the National University of Singapore, who opposes dual-class shares for primary listed companies in Singapore, said that at first glance, he does not have any issues in principle with restricting the structure to secondary listings.

"That's because they're still subject to the laws in their countries," Prof Mak said. "For example, in the US, you have access to class-action there."

He was doubtful, however, about whether secondary listings will do much to improve liquidity on SGX, given that many secondary listings are only thinly traded.

"It may be more optics than anything," he said.