The request of Alibaba, China's largest e-commerce firm, to allow a self-selected group of its past and present management known as the ‘partners' the right to nominate a majority of the directors in its negotiation with the Hong Kong Stock Exchange for an initial public offering has reignited a new round of debate over the one share, one vote policy, which has survived for 27 years in Hong Kong. This paper discusses the viability of allowing the dual-class share structure in the city. Although the United States has adopted dual-class share structures for decades, this paper identifies the major institutional differences between Hong Kong and the United States and argues that Hong Kong should not follow suit due to these differences.
In early 2017, the Financial Services and the Treasury Bureau of Hong Kong conducted a consultation and proposed to put in place a regime under its Companies Ordinance to enhance the transparency of beneficial ownership of companies by requiring them to publish the names of their ultimate owners on company registers in an effort to meet prevailing international standards to combat money laundering and terrorist financing. The consultation conclusion was published in April 2017 which stated that based on the overall support for the proposed legislation, it seeks to introduce such regime by late 2017. This article is written against such background and highlights the rationales for Hong Kong in introducing such a law. In doing so, the article will make reference to the United Kingdom and Singapore which have also recently implemented a similar regime under their company law.
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