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HK Exchange proposes new board to list companies with different voting rights

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[HONG KONG] The Hong Kong stock exchange is proposing to launch a new listing venue that would allow companies with different voting rights to go public in the city, in a bid to remain a global listings powerhouse.

The proposal comes amid a long debate on Hong Kong's attractiveness as a listing destination and on corporate governance norms, sparked by Chinese e-commerce giant Alibaba Group's decision two years ago to make its record US$25 billion IPO in New York, much to Hong Kong's disappointment.

Charles Li, CEO of Hong Kong Exchanges and Clearing Ltd (HKEX), unveiled the proposals at the exchange's annual media lunch on Thursday.

Mr Li said HKEX was exploring a range of issues regarding a potential new board including different shareholding structures: "Is there anyway for us to include those into Hong Kong, and if there is anyway, how do we include that in the new structure?"

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Mr Li said the exchange has submitted a draft proposal for the third board to the authorities.

HKEX's previous efforts to allow companies with different voting rights to list on its main board failed to get support from Hong Kong's securities regulator, the Securities and Futures Commission.

But Mr Li said regardless of the outcome of the recent debate on the so-called weighted voting rights for stock listings in the city, he has never been explicitly told to keep anything off the table.

"As far as I'm concerned it has not been decided."

Hong Kong, which was the world's biggest IPO venue last year, has been struggling to attract new economy companies with the bulk of the listing companies concentrated in property and financial sectors.

The potential new board proposal is being considered alongside a review of GEM, delisting rules, handling of share suspensions and back door listings.

HKEX is reviewing the holiday trading arrangements for stock connect schemes, with a view to reduce trading risk and increase market liquidity.

Mr Li said the exchange was hoping to launch a holistic consultation covering all these issues, but this was yet to be decided.

Longer term, HKEX is also considering creating a Nasdaq style private market where delisted companies would effectively be tracked.