Source: China Foundation News
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Original title: Heavy weight! Shanghai, Shenzhen and Hong Kong Stock Exchange jointly enlarged the move: millet, the United States Corps is expected to be incorporated into Hong Kong Stock Exchange! But four conditions must be met.
Today, both the Shanghai Stock Exchange and the Shenzhen Stock Exchange announced that they had reached a consensus on the inclusion of companies with different voting rights structures into the general conditions of Hong Kong shares and initiated the revision of relevant rules. This is a key step to incorporate companies with different rights with the same shares into the Hong Kong Stock Exchange. After removing the obstacles of the rules, the incorporation of such companies will enter the implementation stage in the future. The comments of millet group and maituan of listed companies with different rights with the same shares in the Hong Kong Stock Exchange are expected to be included in the scope of the Hong Kong Stock Exchange Exchange.
Stocks with different rights of the same share are expected to be incorporated into Hong Kong Stock Exchange
The Shanghai and Shenzhen Stock Exchange said that in order to further improve the interconnection mechanism, the Shanghai and Shenzhen Stock Exchange agreed on the conditions to be met when the different voting rights structure (WVR) stocks listed in Hong Kong were first included in the scope of Hong Kong Stock Exchange.
The Shanghai and Shenzhen Stock Exchanges have revised the relevant business rules, and today they are open to the market for comments. Next, the Shanghai and Shenzhen Stock Exchange will further revise and improve the relevant business rules according to the opinions of all parties in the market, and formally issue them to the market after fulfilling the relevant decision-making and approval procedures.
Relevant people told reporters that the revision of the rules is a key step to incorporate different voting rights structure companies into the scope of Hong Kong Stock Exchange. After the revision is completed, there will be no rule barriers in this respect, and then we can enter the implementation stage.
The Shanghai and Shenzhen Stock Exchange said that on April 10, 2014, the China Securities Regulatory Commission and the Hong Kong Securities and Futures Commission issued a joint announcement stipulating that the scope of Hong Kong stock exchanges in principle includes the Hang Seng Composite Large Stock Index, the constituent stocks of the Hang Seng Composite Medium Stock Index and the Hong Kong Stock Exchange and Shanghai Securities at the same time. H shares of A + H companies listed on the exchange may have different voting rights structure. Considering the particularity of internal governance and shareholder rights of different voting rights structure companies, which are also new varieties in Hong Kong stock market, the specific requirements of incorporating different voting rights structure company stock into Hong Kong stock market for the first time have been formulated after three joint studies and evaluations in Shanghai, Shenzhen and Hong Kong.
This time, the specific modification of the Shanghai Stock Exchange is to add the first inclusion conditions for different voting rights structure company shares in the “Shanghai Stock Exchange Shanghai-Hong Kong Stock Exchange Implementation Measures”. Specifically include: first, six months after listing plus 20 Hong Kong stock trading days; second, 183 days before the survey day (including the survey day) the average daily market value is not less than HK$20 billion, the total turnover of Hong Kong shares is not less than HK$6 billion; third, compliance conditions.
Shenzhen Stock Exchange adds Article 56, paragraph 2, to the Implementation Measures, which specifies that the listed companies with different voting rights structures (except H shares of A+H-share listed companies) on the Stock Exchange shall satisfy the following conditions at the time of initial incorporation, except for the existing Hong Kong Stock Exchange conditions:
The first is to meet the long stable trading period, that is, the listing time of different voting rights companies in Hong Kong needs to meet the “6 months + 20 trading days” condition.
Secondly, it meets certain market value requirements, that is, the average daily market value of Hong Kong stock trading in the recent 183 days is not less than 20 billion Hong Kong dollars.
Third, it is in line with the liquidity arrangement, that is, the total turnover of Hong Kong shares on 183 days is no less than 6 billion Hong Kong dollars.
Fourth, to meet the compliance requirements, that is, after the listing of stocks, the issuers and beneficiaries of different voting rights have not been publicly accused by the Stock Exchange, other public sanctions or triggered the termination of different voting rights for violating the provisions of corporate governance, information disclosure and investor protection measures.
Millet and the United States Mission are expected to be incorporated into Hong Kong Stock Exchange
On April 30, 2018, on the basis of the original listing system, the HKEx liberalized restrictions on emerging three types of companies: companies with different ownership structures, companies with no income in biotechnology, and companies with the HKEx as the second listing place.
Subsequently, the first company with different rights was listed in Hong Kong stock market in July last year. Since then, the topic of incorporating different voting rights structures (WVR) companies into the Hong Kong stock market has been mentioned.
Among the companies that have completed listing on the Hong Kong Stock Exchange, the only ones that adopt different voting rights structure are millet group and American delegation.
Comparing with the conditions issued by the Shanghai and Shenzhen Stock Exchange, the comments of Millet Group and American Corps are expected to be included in Hong Kong Stock Exchange. Judging from the time of listing, millet group’s date of listing is July 9, 2018, while the group’s comment is September 20, 2018, which has exceeded the requirement of six months after listing plus 20 Hong Kong stock trading days. Judging from the market value, the total market value of the American Mission comment is HK$370 billion, and the total market value of the millet group is HK$210.8 billion. In addition, the average daily turnover of the two companies is also in the billion and billion level.
What is the significance of different rights in the same share?
The different rights of the same share refer to the separation of voting rights and earnings rights. That is to say, the voting rights of a company are not entirely distributed according to the principle of “one share, one right”. A minority shareholder who holds only a few shares can obtain the voting rights larger than his shares.
Most of the enterprises that implement different rights of the same share are innovative enterprises. According to the research and analysis of Xingye, the business model of scientific and technological enterprises determines the inevitability of different ownership structure of the same share. Huawei, Ali, Jingdong, Google, Facebook and so on are all the same share structure with different rights, but they are different in form. Scientific and technological enterprises mainly operate light assets, so it is difficult to obtain credit support from commercial banks. Such enterprises need a large amount of capital investment in the initial stage. The profit cycle is longer than that of traditional enterprises, and the urgency of financing is higher. Multi-round equity financing can easily dilute the shares of the founder or management team, or even lose the company’s decision-making power. A typical example is Apple, which shares the same power system. When Jobs was expelled from Apple’s board of directors in 1985, he held only 11.3% of the shares.
At the beginning of the 20th century, the NYSE first introduced the dual equity system, which was suspended for decades due to various pressures. But the other two exchanges, the American Stock Exchange and Nasdaq, began to be tolerant of dual ownership, attracting more companies to list on the NYSE. Many companies listed on the NYSE also planned to issue shares with different rights. Eventually, the NYSE also chose to liberalize the dual ownership restriction. In the game of several major exchanges, the listing and management system of enterprises with different rights of the same share has been gradually improved.
Since 1989, the Hong Kong Stock Exchange has abolished the B-share listing. In 2013, Alibaba abandoned its listing in Hong Kong and turned to the U.S. share listing. After the loss of Alibaba, the Hong Kong Stock Exchange re-opened the system of different rights of the same share in order to avoid continuing to miss the leading technology enterprises.