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Hong Kong regulator backs proposal to change listing rules

Hong Kong's Securities and Futures Commission backed a proposal from the city's stock exchange to allow certain companies with weighted voting rights structures to list under a change of rules, the South China Morning Post reported Dec. 20, citing SFC Chairman Carlson Tong Ka-shing.

The Stock Exchange of Hong Kong's proposal will allow technology companies with at least HK$10 billion to list with multiple classes of shares. Hong Kong has so far only allowed companies with a one-share-one-vote scheme to float their stocks publicly. The proposal aims to attract new economy companies, such as technology enterprises, to list in the city.

Tong said in a media briefing that he hopes the amendments will attract at least one giant tech company to list in Hong Kong by October 2018, when he is due to retire. The city, he added, will need to play "catch up" with other markets if it wants to attract new tech companies.

The SFC's support for the proposed changes marks a turnaround since it objected to similar amendments mooted in 2015, after Alibaba Group Holding Ltd. abandoned its Hong Kong IPO plan for a U.S. one due to concerns over its shareholding structure.

This time around, Tong indicated support based on a need to compete with other markets for IPOs, among other reasons. Chinese tech companies seem to prefer weighted voting rights structures, he said, a trait Hong Kong needs to accommodate if it wants to compete with other markets.

About 50% of U.S.-listed mainland technology companies have multiple-class shareholding structures, Tong noted, compared to 17% for non-mainland ones.

He also stressed that proper investor protection must be in place once the proposed changes roll out mid-2018 as scheduled.

In 2017, a number of Chinese fintech companies went public in the U.S., with more looking to launch their IPOs there.