Say 'no' to dual class shares

FROM the first quarter of 2016, public companies in Singapore can issue ordinary shares with different voting rights. The Singapore Exchange (SGX) and Monetary Authority of Singapore (MAS) are currently reviewing whether to allow dual class shares for listed companies.

Hong Kong recently shut the door on dual class shares after the Hong Kong Securities and Futures Commission (SFC) rejected it. The Australian Securities Exchange does not allow it (with minor exceptions for cooperatives and mutuals), and the Financial Conduct Authority (FCA) in the UK has also recently banned dual class shares for companies listing on the Main Market of the London Stock Exchange.

In the US, the recent popularity of dual class shares among technology companies going public has re-ignited the debate about its merits. Dual class shares were largely disallowed by the New York Stock Exchange (NYSE) from 1940 until the takeover era in the 1980s, when the NYSE suspended the restriction as some companies seeking to shield themselves from takeovers started to convert from one-share-one-vote to dual class shares and moved to other US exchanges. The Securities and Exchange Commission (SEC) eventually adopted a rule prohibiting companies that were already listed with a single class of shares from converting into dual class shares, which remains the position in the US today.