SINGAPORE (Apr 9): The Singapore Exchange has taken another step towards the introduction of dual-class shares. On March 28, it issued a consultation paper on a proposed listing framework for DCS structures. SGX has invited comments on the paper, to be submitted by April 27.

Some strong views on SGX’s proposed safeguards for investors should be expected, as well as on the utility and risks of DCS. Since 1925, when the owners of automaker Dodge Brothers created a stir on the New York Stock Exchange because their 1.7% equity stake gave them total voting control, DCS have been controversial. In 1940, NYSE introduced a rule to limit multiple-class stock. But that was overturned in 1986 as companies threatened to get listed elsewhere. Today, multiple-class shares are allowed not just in the US but also in Canada, Brazil and many parts of Europe. And they continue to attract debate.

Among the critics of the DCS structure is the Asian Corporate Governance Association. Last month, it submitted a letter to Hong Kong Exchanges and Clearing arguing that any adoption of weighted voting rights would pose a systemic risk to the Hong Kong market. ACGA is a non-profit association of institutional investors, Asian-listed companies, insurance and accounting firms, and universities. Like SGX, HKEx is also looking to introduce DCS.

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