Listing of Companies with Dual Class Shares
17 April 2018
The Singapore Exchange (SGX) has proposed amendments to the SGX-ST Mainboard Listing Rules to implement a framework for the listing of companies with a dual class share structure. Feedback received from the earlier concept consultation paper has been incorporated, where accepted, into the proposed amendments.
- The business model of the company;
- Its operating track record;
- The role and contribution of the intended holders of the multi-vote shares to the success of the company;
- How actively involved the intended holders of multi-vote shares are in the company; and
- The level of participation by sophisticated investors.
Safeguards against entrenchment and expropriation risks
The safeguards that are proposed to be included in the Listing Rules are as follows:
- The maximum permitted voting differential for multi-vote shares as against single vote shares is 10:1.
- The number of multiple votes that each multi-vote share carries is fixed at the listing and cannot subsequently be altered.
- After the initial public offering, no additional multi-vote shares may be issued except in a rights issue with the issuance of ordinary voting shares. The rights issue must not increase the proportion of voting rights referable to the multi-vote shares as against single vote shares.
- A corporate action (eg, sub-division of shares, share buy-back) must not increase the proportion of voting rights referable to the multi-vote shares as against the single vote shares.
- A holder of multi-vote shares must be a director and must, subject to the exception set out below, remain a director for so long as he holds multi-vote shares. He need not, however, be an executive director and may be a non-executive director.
- A multi-vote share must automatically convert to a single-vote share if it is sold or transferred to any other person, including another holder of multi-vote shares. It must also convert to a single-vote share if its holder ceases to be a director for any reason. Shareholders may, however, approve the multi-vote shares remaining as multi-vote shares through a voting process where the multi-vote shares carry only one vote per share.
- Shareholders holding ordinary single vote shares must hold at least 10% of the total voting rights. The SGX is consulting on whether the total voting rights should be calculated on the basis that the multi-vote shares hold only one vote per share or their full number of multiple votes.
- Shareholders holding ordinary single vote shares may requisition a general meeting if they collectively hold at least 10% of the total voting rights.
- When shareholders’ approval for the following matters is sought, the multi-vote shares will carry only one vote per share:
- Changes to the issuer’s Articles of Association or other constituent documents;
- Variation of rights attached to any class of shares;
- Appointment and removal of independent directors;
- Appointment and removal of auditors;
- Winding up of the issuer; and
- Delisting of the issuer.