Dual-class shares: issue now is striking the right balance

THE Singapore Exchange (SGX) is now seeking public feedback on two fronts - first, whether it should amend its listing manual to allow for dual-class shares (DCS) which is an arrangement that gives certain privileged shareholders, usually founders, disproportionately more voting rights relative to their shareholdings and second, what safeguards are required if this class of shares is deemed appropriate for the local market.

To allow DCS here has been the subject of heated debate over the past year because corporate governance advocates have quite rightly pointed out that it amounts to tampering with the traditional "one man, one vote" system that has served markets well for decades.

In an ideal world then, one where shareholder protection counts above all else, the doors of the local market should not be opened to DCS firms. And promising startups would still list here. But the realities of today's business world are far from ideal.