Mixed WVR not recommended

Business | Avery Chen 29 May 2020

The Hong Kong Investment Funds Association has recommended companies not be allowed to simultaneously have individual and corporate weighted voting rights structures for at least two to three years, as the mixed model will harm minority investor rights.

Hong Kong Exchanges and Clearing (0388) has launched a consultation on its proposed introduction of corporate WVR framework. The consultation will end on Sunday.

The bourse operator has reformed its listing regime to allow companies with dual-class shares since 2018, but only individuals with an active executive role in the business can be WVR beneficiaries. The move has attracted new economy firms like Xiaomi (1810), Meituan Dianping (3690), and Alibaba (9988) to list in the city.

The HKIFA said "one share one vote" is the bedrock of sound corporate governance and plays a pivotal role in protecting investor interests, while differential voting rights will inevitably encroach upon investor rights.

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