Hang Seng Indexes Company is making considerations for the inclusion of listed companies that have shares with unequal voting rights, most notably applicable to China’s tech giants.
The use of dual-class shares and weighted voting rights (WVR) is favored by Chinese tech firms whose founders hope to retain control after public listings. Hang Seng Indexes Company acknowledged the «unequal voting right structure» of WVRs as an issue of concern as it would give an advantage of minority shareholders.
The index compiler will take public feedback in a consultation period that will end on March 13 with a possibility for results to be announced in May.
«Too Good to Ignore»
In a paper issued by Hang Seng Indexes, it argued in favor of the inclusion of such firms despite their preference for WVR and the risks attached. According to the paper, it was «inappropriate» to exclude large caps such scale and underlined that the future outlook of the firms posed an opportunity that is «too good to ignore».
«There is a diverse range of market views over the index eligibility of [WVRs],» the HSI paper said. «As these entities are usually large technology-related mainland companies with global business interests, advocates see them as an excellent investment opportunity that is too good to ignore.»
In addition to WVR-based companies, Hang Seng Indexes is also seeking feedback on the inclusion of companies with secondary listing status in Hong Kong. The most recent landmark example involved Alibaba’s secondary listing in the city after it IPO in New York five years ago.
