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SGX to allow listing of dual-class shares with immediate effect
SINGAPORE Exchange (SGX) has approved rules surrounding dual class shares (DCS) structures , green-lighting such companies with such share structures to list here with immediate effect.
These rules accompanies Singapore's transition to a new economy, SGX said in a statement on Tuesday after market close.
Loh Boon Chye, chief executive of SGX, said in the statement: "SGX today joins global exchanges in Canada, Europe and the US where companies led by founder-entrepreneurs who require funding for a rapid ramp-up of the business while retaining the ability to execute on a long-term strategy, are able to list. Investors who understand and agree with the business model and management of DCS companies will also have more choice."
A Monetary Authority of Singapore (MAS) spokesperson said: “SGX’s framework for DCS structures strikes a balance between supporting high-growth companies, and having in place safeguards to mitigate governance risks associated with such structures. DCS listings will broaden the range of investment options for investors and add vibrancy to Singapore’s capital markets.”
This comes after two rounds of public consultations, with the second consultation closing on April 27 this year. SGX also released its response to feedback from its consultation paper.
Safeguards will be put in place to "address specific risks", SGX said in its statement. Each multiple voting share will be capped at 10 votes a share, and holders of multiple voting shares will be limited to named individuals or permitted holder groups whose scope must be specified at the initial public offering (IPO).
It will require an enhanced voting process where all shares carry one vote each regardless of class for the appointment and removal of independent directors and/or auditors, variation of rights attached to any class of shares, a reverse takeover, winding-up or delisting.
The majority of the audit committee, nominating committee and the remuneration committee, and each of their respective chairman must be independent directors. Moreover, sunset clauses will be required whereby multiple voting shares will auto-convert to ordinary voting (OV) shares under circumstances that the company must stipulate at the time of the IPO.
After the missed opportunity of hosting Manchester United’s listing in 2012, the government undertook a comprehensive review of Singapore’s Companies Act. This was endorsed by Parliament in 2014. Singapore’s Committee on the Future Economy also identified the share structure to support the growth of high-tech companies.