Home / Financial Services/ BlackRock pitches for shareholder protection as Asia bourses weigh dual-class listings

BlackRock pitches for shareholder protection as Asia bourses weigh dual-class listings

Comments / {{hitsCtrl.values.hits}} Views / Wednesday, 4 October 2017 00:00

HONG KONG (Reuters): Hong Kong and Singapore bourses need to introduce shareholder protection measures if they allow companies with dual-classes of shares to list, BlackRock Inc’s head of investment stewardship for Asia Pacific said on Tuesday.

Hit by dwindling new listings and a growing number of Asian startups listing in the United States, both Singapore Exchange Ltd and Hong Kong Exchanges & Clearing Ltd. have proposed new rules to allow companies to sell shares with different voting rights.

Introducing those changes may not help attract prospective initial public offering (IPO) candidates, mainly technology startups that choose New York, Pru Bennett told the Reuters Financial Regulation Summit.

BlackRock, the world’s largest asset manager, was among several institutional investors opposing those changes in Hong Kong and Singapore as concerns grow that corporate governance in Asia Pacific would take a further hit.

“It’s the right thing for the exchanges to review what they’re doing to make sure they’re relevant and attracting the right companies and that they have some diversity amongst the listed companies on their boards,” Bennett said at her office in Hong Kong.

“We are not supporters of weighted voting rights or dual class shares. We think it potentially detracts from shareholder rights.”

The proposals come years after Chinese tech giants including Alibaba Group and search company Baidu picked New York over Hong Kong, while more recently Singapore lost a $1 billion listing from homegrown e-commerce and digital payment firm Sea Ltd to the Big Apple.

“There are many reasons the companies, particularly Chinese internet companies, list in the US Dual class shares, weighted voting rights is a component of that, but I’m not convinced that it’s the main reason,” Bennett said.

The number of public activist campaigns in Asia almost doubled in the first half of 2017 from levels seen in 2013 and 2014, with 38 companies facing calls from investors for greater transparency or fairer treatment to minority shareholders, according to research firm Activist Insight.

Despite that initial jump, the level of activity is forecast to decline to 65 for all of 2017 from the record 78 campaigns in 2016, it added.


Shareholder activism from investors such as US hedge fund Elliott Management Corp and others would continue in coming years in Asia, Bennett said.

But a major surge was unlikely because several companies in local markets in the region were controlled by a small number of large shareholders, reducing the likelihood of success in activist campaigns, she added.

With 17 companies facing public campaigns, Japan took the lead among Asian countries, and it could remain a top market for activists.

“When you’ve got an incompetent board that’s a bit of a magnet for someone to come in and try to make changes because incompetent boards generally don’t make as good decisions as a competent board,” Bennett said about issues in Japan.

“It’s a bit like when you’re in Africa and you see the gazelles running and the slow one at the back gets eaten by the lion.” 


Share This Article


Today's Columnists

Bringing beedi into tax net can yield Rs. 40 b in revenue

Tuesday, 24 October 2017

Last week, the Financial Times quoted an AFP article that stated Sri Lanka will start regulating the toddy industry to boost tax revenues from the informal sector. This same principle should be applied to the beedi trade, which has also grown unabate

Grade 5 Scholarship examination and the future of the country

Tuesday, 24 October 2017

The Grade 5 scholarship examination results have been released recently. Although this is known as the “Mothers’ exam,” the mentality of the children can be well articulated when children come from the examination halls after the exams. Today w

Need for tax reforms: Government should not lose it this time but go for them early

Monday, 23 October 2017

In the first economic policy statement, Prime Minister Ranil Wickremesinghe made a number of pledges related to taxes and tax reforms. One was that the Government would review whether the tax concessions given to investors have really delivered the e

Lessons from Geneva

Saturday, 21 October 2017

‘Mission Impossible – Geneva’ is an inspiring account of developments at the Human Rights Council in Geneva when Dayan Jayatilleka was our Permanent Representative there. It is written by his wife Sanja, which provides for fascinating insights

Columnists More