Fund managers back HK's "one share, one vote", disagree with Alibaba

HONG KONG Tue Apr 15, 2014 12:09pm IST

An employee walks past a logo of Alibaba Group at its headquarters on the outskirts of Hangzhou, Zhejiang province, in this May 17, 2010 file photo. REUTERS/Stringer/Files

An employee walks past a logo of Alibaba Group at its headquarters on the outskirts of Hangzhou, Zhejiang province, in this May 17, 2010 file photo.

Credit: Reuters/Stringer/Files

Related Topics

Stocks

   

HONG KONG (Reuters) - Global fund managers of nearly $14 trillion in assets support Hong Kong's "one share, one vote" principle, and oppose changing listing rules to allow non-standard shareholding structures, the Asian Corporate Governance Association (ACGA) said on Tuesday.

The association questioned 54 portfolio managers and corporate governance officers about proposals discussed during Hong Kong regulators' talks last year with Chinese e-commerce giant Alibaba Group Holding Ltd, ahead of a possible listing.

Regulators dismissed Alibaba's request to allow a small group of company insiders nominate the majority of its board, prompting the company to consider New York for a possible initial public offering worth over $16 billion. [ID:nL3N0MG3PK]

In the survey, 51 respondents were against such non-standard partnership structures where partners can nominate the majority of a company's board of directors. Most also said they would demand a discount of up to 25 percent on the share price of a company using such a structure in Hong Kong.

All but one respondent also opposed the notion of two classes of shares under which controlling shareholders have more votes than other shareholders.

"We are pleased to see such firm support for equal treatment of all shareholders," said ACGA Secretary General Jamie Allen in a statement. "Any deviation from equal treatment would compromise investor protection irreversibly and exemptions for so-called innovative companies would likely backfire against Hong Kong."

Hong Kong Exchanges and Clearing Ltd (HKEx) (0388.HK), on whose bourse Alibaba sought to list, did not offer an immediate comment.

When asked about Alibaba's partnership structure in particular, 38 respondents said it would have a "negative valuation effect" on the company, with 20 saying they would apply "governance discounts" ranging from 5 percent to 50 percent.

"We're not against Alibaba listing in Hong Kong," Allen said in a briefing. "We simply don't support its request to list with a special partnership structure that undermines the one share, one vote and investor protection in Hong Kong."

An Alibaba spokeswoman said in a statement the company supports Hong Kong as a place for entrepreneurs, and that it welcomes views consistent with that development.

"We respect the policies of Hong Kong and will continue to pay close attention and support the process of innovation and development here," the spokeswoman said.

The association sent the survey in December to more than 70 members, most of whom were institutional investors headquartered or with offices in Hong Kong, but also based in New Zealand, Europe and North America. It compiled the results in the first quarter of 2014.

(Editing by Christopher Cushing)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

AMAZON

TECH SHOWCASE

Rising Market Value

Rising Market Value

Facebook goes express to mega-cap status  Full Article 

Right to be Forgotten

Right to be Forgotten

Google under fire from regulators over response to EU privacy ruling.  Full Article 

Record Smartphone Sales

Record Sales

LG Electronics flags further mobile improvement after Q2 profit jump.  Full Article 

Smartwatch

Smartwatch

Swatch Group denies working with Apple on smartwatch.  Full Article 

Strong Results

Strong Results

Nokia's fortunes brighten on heavy network spending.  Full Article 

Battle of Giants

Battle of Giants

In China, Apple's focus pays off while Samsung feels squeeze.  Full Article 

Anonymity Services

Anonymity Services

Flaws could expose users of privacy-protecting software, researchers say.  Full Article 

Biggest Chipmaker

Biggest Chipmaker

China regulator determines Qualcomm has monopoly - state-run newspaper.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage