26 March 2019 is listing in the US where its dual-class share structure is allowed. Photo: Reuters is listing in the US where its dual-class share structure is allowed. Photo: Reuters going public but potential investors have little say

Technology giant Alibaba Group’s decision to launch an initial public offering in the United States drew mixed reactions in Hong Kong, where it originally intended to list.

Some felt it was time for the city to rethink its rules to allow a dual-class share structure, as proposed by Alibaba founder Jack Ma, so that founders would have a free hand in setting the company’s direction and strategy, while others insisted that the rights of ordinary investors are better protected under the “one share, one vote” principle.

Alibaba’s IPO was a big loss for the city in terms of potential revenue and profits from the fundraising exercise. The offering could be worth at least U$15 billion, or even surpass the US$16 billion reeled in by Facebook’s IPO two years ago. The entire company could be worth about US$100 billion.

But investors also have to ask themselves how much of a co-owner are they in terms of participating in the company’s affairs and helping guide its direction., Alibaba’s chief rival in the business-to-consumer segment, could provide some answers.

The Beijing-based e-commerce company filed for a US$1.5 billion IPO in the US in January and is launching the sale this week. 

Like Alibaba, had also contemplated a listing in Hong Kong, but decided to go public in the US after insisting on a corporate governance structure that the city’s regulators felt was not in conformity with their listing requirements.

Richard Liu, the firm’s chairman and chief executive, will control 83.7 percent of the voting rights after the IPO while owning a 21 percent economic stake, because he owns special shares that carry 20 votes apiece, the Wall Street Journal reported on Sunday, citing the company’s IPO filing.

Further strengthening Liu’s control over the company is a provision which prevents the board from holding any official meeting without him.

The dual-class share model has become popular among tech firms such as Facebook, Google and LinkedIn, allowing their founders to maintain control over their companies, and has caught on with Chinese companies of late, according to the newspaper.

Sina Corp., parent of microblog operator Weibo Corp., holds shares worth three votes apiece, giving it 80 percent of the voting power. Sports lottery site Inc. and online classified-ads platform granted senior management shares worth 10 votes each, while executives at internet retailer LightInTheBox Holding get three votes per share, the report said.

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