Financial guru Francis Leung Pak-to threw his support behind the stock exchange’s proposal to allow a weighted voting rights structure for listed companies, saying Hong Kong may lose its status as a premier stock market if it fails to change with the times.
Leung, chairman of the Chamber of Hong Kong Listed Companies, said the proposal of the Hong Kong Exchanges and Clearing (00388.HK) will help the city to develop a multilayer capital market that attracts innovative companies with great potential for growth, the Hong Kong Economic Journal reported on Thursday.
The proposal allows different voting rights for shareholders of the same listed company, thus enabling company founders to retain control of the direction and operation of their enterprise while gaining fresh capital through the stock market.
Leung, who is known as “the father of red chips” for introducing Chinese companies to the Hong Kong market over a decade ago, noted that four of the top 10 internet companies are based in China but only one is listed in Hong Kong.
This reflects the city’s backward attitude towards innovation, he said. By comparison, the Chinese markets include main boards, ChiNext, SME board, and the so-called agency share transfer system which allows over-the-counter trading of shares.
Lo Ka-shui, deputy chairman of the Chamber of Hong Kong Listed Companies, also supported the HKEx proposal, saying the city faces the risk of being marginalized unless it adapts to changes in the market environment.
The Securities and Futures Commission earlier issued a statement opposing the HKEx suggestion, saying that weighted voting rights could hurt the interest of shareholders.
Translation by Vey Wong
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