Usually, the shareholding structure of a company is a unitary system, that is, all the shares are the same share with the same rights, one share, one vote, but in the binary system (also known as dual shareholding structure, AB share structure) shareholding structure of the developed market, the management tries to control the whole company with a small amount of capital, so the company's shares will be divided into two kinds of voting rights, high voting rights, high voting power of the shares with each share of the voting rights of 2 to 10 votes, known as B High-voting stock has 2 to 10 votes per share and is called Class B stock, which is mainly held by the management; low-voting stock is held by the general shareholders and has only 1 vote or even no voting rights, which is called Class A stock. As compensation, high-voting shares are generally less liquid, and once they are sold, they are converted from Class B shares to Class A shares.
Introduction:
In August 2014, the Hong Kong Exchanges and Clearing Limited (HKEx) released a "Concept Paper on Different Share Rights Structures," which explored whether different share rights structures should be allowed. The Chief Executive of the Hong Kong Stock Exchange (HKEx), Mr. Simon Li, said that the consultation was about "the future competitiveness of the Hong Kong market" and that the HKEx "does not have any preconceived notions, but only aims to provide an arena for rational debates".
The HKEx finally announced the public consultation paper on the reform of the different stock rights structure on August 29, 2014, which was published on the website of HKEx. Reform of the public consultation paper. This program was caused by Alibaba's desire to go, in 2013, to use the U.S. form of AB shares to list in Hong Kong, and sparked a lot of controversy in the Hong Kong industry. As the reform is far away, Alibaba finally chose to go to the U.S.
Hong Kong Stock Exchange announced yesterday at the close of the Hong Kong stock market, in order to broaden the Hong Kong listing system and the new provisions of the Listing Rules will be effective from April 30, and at the same time began to accept the new system intends to apply for listing in accordance with the new system of the new emerging and innovative entrepreneurial companies listing applications. HKEx chief executive Simon Li expects to receive applications from companies soon after the implementation of the new rules, "and the number will certainly not be in the single digits, it is likely that more than 10 companies will apply. The first such company is expected to list on the HKSE in June to July at the earliest."
Hong Kong's Financial Secretary, Mr. Paul Chan Mo-po, believes that the reform of the listing regime for emerging and innovative industries caters to the needs of the new economic environment, further enhances the attractiveness of Hong Kong's listing platform and strengthens Hong Kong's overall competitiveness.
It is reported that as part of the Hong Kong listing reform, the Hong Kong Stock Exchange has added three new chapters to the Main Board Listing Rules and made consequential amendments to the existing provisions of the Listing Rules to allow the listing of biotechnology companies failing to pass the Main Board Financial Eligibility Test, to allow the listing of companies with different shareholding structures and to establish a new and convenient secondary listing channel for Greater China and international companies seeking a secondary listing in Hong Kong. The new measures will facilitate the secondary listing of Greater China and international companies seeking to list in Hong Kong.
The HKEx announced that the results of the current round of market consultation on the listing rules show that the vast majority of market stakeholders support the proposed new listing regime, with 96% support for the new biotechnology chapter; 84% support for the new different voting rights chapter; and 96% support for the new secondary listing chapter, which determines the broad implementation of the proposals in the Consultation Paper on Amendments to the Listing Rules.
Hong Kong Stock Exchange (HKEx) proposes to add a new Chapter 8A to the Listing Rules to set out the eligibility and investor protection measures that must be in place for companies with different voting rights to be listed, and to require that applicants must be in the innovation sector and demonstrate that they are eligible and suitable to be listed in this way. Initially, the HKEx will only accept companies with a market capitalization of not less than HK$10 billion for listing, and if the market capitalization of the company does not reach HK$40 billion, the company must have a revenue of at least HK$1 billion in the most recent financial year. In addition, it is also stipulated that enterprises with different voting rights may not alter the rights attached to different voting shares, and that applicants must have at least 10% of the issued share capital at the time of their initial listing, but may not own more than 50% of the relevant economic benefits. At the same time, the HKEx has proposed for such companies that different voting rights can only be given to directors of the listed company at the time of listing or after listing, and that the voting rights of different voting shares must not be more than 10 times the ordinary voting rights.
For biotechnology companies to list in Hong Kong, the HKEx suggests that the expected market capitalization of a biotechnology company at the time of listing should not be less than 1.5 billion Hong Kong dollars, and the applicant must demonstrate the progress of the research and development of the core products obtained from the outsourcing of licensed technology or outsourcing, and the core product research and development should be at least 12 months, and if the company is engaged in the research and development of pharmaceutical or biological products, it must have a number of potential products, and engaged in the medical machinery is allowed to have only one type of equipment products. If the company is engaged in pharmaceutical or biological product development, it must have multiple potential products, whereas if it is engaged in medical machinery, it is allowed to have only one equipment product. The HKEx also proposes to require that a biotechnology company applying for listing needs to receive a considerable amount of third-party investment from a senior investor at least six months before listing, and may not withdraw it before the public offering. It's worth noting that the SEHK has deleted the word "long-term" from the requirement that a biotech listing applicant must have a "long-term patent" to avoid unnecessary uncertainty and confusion.
The HKEx announced in its consultation summary the criteria for listing in Hong Kong as a secondary listing, targeting mainly companies in the innovation industry, with a good compliance record on the New York Stock Exchange (NYSE), the Nasdaq and the London Stock Exchange (LSE) for at least the last two financial years, and an expected minimum market capitalization of HK$10 billion when listing in Hong Kong as a secondary listing.
In fact, the A-share market does not have the conditions to accept the listing of companies with special shareholding structure of "different rights for the same share", according to the actual situation of the A-share market at the current stage.
To accept the listing of companies with "different rights on the same shares", it is necessary for the corresponding market to develop to a mature stage, with mature investors and financiers, with a sound regulatory system and mature regulators, with a balanced positioning of the investment and financing functions and their development, and with sound and complete laws and regulations for the protection of investors' rights and interests, as well as a sound and complete legal framework for the protection of investors' rights and interests. There are sound and complete laws and regulations to protect investors' rights and interests, and the enforcement of laws and regulations is strict. Obviously, the current stage of the A-share market, and these requirements and conditions there is a certain gap.
Therefore, participants in the A-share market do not need to be "envious" and "hate". But we need to look squarely at the current situation and problems in the A-share market, and face the impact of Hong Kong stocks on the mainland capital market with a positive mindset. Although the implementation of Hong Kong's "different shares" to A-share market participants brought a certain psychological level of impact, but, in fact, for the A-share market to bring a major benefit.
On the one hand, it has a positive significance for promoting the development of domestic "new economy" companies. As mentioned earlier, the Hong Kong Stock Exchange allows "different shares with different rights" type of special shareholding structure of companies listed in Hong Kong, which is conducive to enhancing the attractiveness of the Hong Kong market to the mainland "new economy" type of companies, and can attract more mainland enterprises to go to Hong Kong for listing.
On the other hand, the A-share market can play a role in exploring and reducing the cost of trial and error in the A-share market. Because the A-share market at this stage does not have the conditions to accept the listing of companies with special shareholding structure of "different rights on the same shares", the Hong Kong stock market, as a pilot of the new system design of "different rights on the same shares", has introduced and practiced the acceptance of "different rights on the same shares". The Hong Kong stock market, as a pilot of the new system design of "different shares with different rights", has acted as a pathfinder and pioneer for the eventual introduction of the "different shares with different rights" system in the A-share market, based on the introduction and practice of accepting the listing of "different shares with different rights" type of companies.
Specifically, the HKEx plans to push forward the consultation on the listing rules in the first quarter of 2018, and plans to formulate systematic and perfect rules and regulations, and implement programs that are most conducive to the development of Hong Kong's market and best able to maintain Hong Kong's international competitiveness, which emphasizes that, in particular, it must be set up to provide appropriate investor protection measures.
And the introduction of these corresponding protection measures, can be for the A-share market in the future to introduce and implement the practice of "different rights of the same shares" this new system to accumulate experience, on the basis of which efforts to strengthen their own construction, so that the A-share gradually have the conditions to accept the "different rights of the same shares" type of companies listed. "The first time I saw this, I was in the middle of the night, and I was in the middle of the night, and I was in the middle of the night, and I was in the middle of the night, and I was in the middle of the night.