Dual class shares: is it really a done deal?

THERE are many in the market who believe that the entry of dual-class shares (DCS) on the Singapore Exchange (SGX) is inevitable and that the decision to introduce such securities has already been made, the planned circulation of a Consultation Paper notwithstanding. They view consultation as simply SGX going through the motions to demonstrate good faith in seeking public feedback when major changes to the Listing Manual are contemplated.

This conclusion was drawn from two developments this year - the Companies Act was amended to allow for DCS and SGX's Listings Advisory Committee (LAC) a few months ago recommended that the Listing Rules follow suit.

Taken together - and the pro-DCS tone of a recent Roundtable on the subject - there is a sense that the authorities here are moving inexorably towards opening the doors to companies which might want to accord proportionately greater voting rights to privileged shareholders, typically founders, the justification being that with adequate safeguards in place, minority rights would not be compromised.