Hong Kong to ease rules for secondary listing of U.S.,
UK-listed firms
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[February 23, 2018]
By Sumeet Chatterjee and Jennifer Hughes
HONG KONG (Reuters) - Hong Kong Exchanges
and Clearing (HKEX) <0388.HK> plans to ease rules for U.S. and UK-listed
Chinese and other international companies to consider a secondary
listing in Hong Kong.
The plans are part of a broader move to woo big privately owned Chinese
tech companies to list in the Asian financial hub, including tech giants
such as Alibaba Group Holding <BABA.N> and Baidu <BIDU.O> that are
listed in New York.
"The reason we want to have a separated regime for secondary listing is
because currently we have many restrictions that makes it difficult for
particularly Greater China companies to come to Hong Kong," HKEX Chief
Executive Charles Li said on Friday.
Announcing the proposals for allowing such listings, Li said HKEX, the
city's exchange operator, would also target overseas companies mainly
those from the new technology sectors such as Google-owner Alphabet <GOOGL.O>
and Facebook <FB.O>.

On Friday, the exchange published details of the proposed rule changes
which are part of a package that will also allow some companies to list
in Hong Kong with weighted voting rights that give greater power to
founding shareholders.
HKEX will now seek public feedback to the proposals, which ends on March
23, it said.
In spite of Hong Kong's role as the world's biggest equity
capital-raising center for four of the last 10 years, it has fallen well
behind New York, its arch-rival, in the battle for hot tech stocks and
other growth sectors.
Hong Kong is hoping that easing rules for secondary listings and
allowing primary listing of companies with dual-class shares will put in
on a more even footing with New York.
Under the proposed rule changes for secondary listing, HKEX plans to
allow firms in Greater China, which includes Hong Kong, that listed in
New York Stock Exchange, Nasdaq or the main board of the London Stock
Exchange on or before Dec 15, 2017, to list in Hong Kong with existing
weighted voting right structure.
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The name of Hong Kong
Exchanges and Clearing Limited is displayed at the entrance in Hong
Kong, China January 24, 2018. REUTERS/Bobby Yip/File Photo

DUAL-CLASS SHARES
HKEX on Friday also unveiled proposals for primary listing of companies with
dual-class shares, which includes having an expected market value of at least
HK$10 billion ($1.28 billion) and a track record of "high business growth."
Allowing dual-class shares is a big shift for Hong Kong whose one-share-one-vote
principle has for 30 years blocked efforts by tycoons from Li Ka-shing to
Alibaba's Jack Ma to list alternative shareholding structures.
Alibaba held its record $25 billion public float in New York in 2014 after Hong
Kong refused to accept its governance structure, where a self-selecting group of
senior managers control the majority of board appointments.
Corporate governance activists have, however, argued that the dual-class share
structure risks hurting minority investors. HKEX sought to ease those concerns
on Friday by proposing a slew of "safeguards".
Those included plans to make it mandatory for shareholders, who benefit from
weighted votes, must together own at least 10 percent of the company's economic
interest when it lists to ensure their interests are aligned with ordinary
shareholders.
Other measures proposed to protect ordinary shareholders include requirements to
include warnings in listing documents and enhancing corporate governance
committee to review and monitor compliance.

(Reporting by Sumeet Chatterjee and Jennifer Hughes; Editing by Muralikumar
Anantharaman/Keith Weir)
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