Hong Kong Exchange Sets Timetable for Listing Rule Changes

Hong Kong set the timetable for the widely expected listing rules change to allow companies with the controversial dual-class share structure to list on its bourse, aiming to release the amendment as early as late April.

This would be at least two months sooner than the original plan. Hong Kong Exchanges & Clearing Ltd. (HKEX), the operator of the bourse, in January had predicted that it could start accepting applications of initial public offerings (IPOs) of companies with dual-class share structures starting in June.

HKEX Chief Executive Charles Li said on Friday that there is no need for additional consultation because a consensus has been reached on the reform.

July and August are usually a quieter time in the stock market, so moving the reform to late April would allow companies to list before the summer, Li said.

The exchange on Friday issued a new consultation paper detailing the proposed rule changes that will permit listings of companies with weighted voting right structures. Stock symbols of companies with weighted voting right structures will be marked with “W,” Li said.

The long-awaited overhaul in Hong Kong’s listing rules comes in the wake of years of debate and the loss of technology giant Alibaba Group’s listing to the United States in 2014.

Alibaba originally sought to float in Hong Kong. However, it chose to have its record $25 billion IPO in New York after Hong Kong refused to accept the company’s governance structure that conflicted with Hong Kong’s “one share, one vote” principle.

Some of the world’s largest and most influential tech companies, from Facebook Inc. to Google parent Alphabet Corp., use dual-class share structures to maintain the influence of their founders and management after going public.

China’s largest smartphone maker, Xiaomi Inc., is preparing for an IPO, which is expected in the second half of the year. Sources said Xiaomi wants to become the first company with a non-traditional share structure to list in Hong Kong.

In its consultation paper, however, the exchange still said that the “one-share, one vote” principle continues to be the optimum means of protecting shareholders.

The rule changes also include permitting listing of biotech companies that do not meet any of the financial eligibility requirements, and offering concessions to U.S. and UK-listed companies considering a secondary listing in Hong Kong.

The public consultation will end on March 23, and the consultation conclusion may be released as early as late April, HKEX said.