Reshaping the Stock Market to Accommodate Chinese Business Giants: The Reintroduction of Weighted Voting Shares in Hong Kong

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Abstract

In April 2018, the Hong Kong stock market reintroduced weighted voting shares to enhance its attractiveness primarily to Chinese issuers. By the end of 2021, however, only six Chinese issuers have used weighted voting shares in their Hong Kong IPOs. Based mainly on empirical and comparative analyses, this article attributes Chinese issuers’ sparse use of weighted voting shares to the highly restrictive ex-ante regulatory strategies employed in Hong Kong, which are purposefully designed to ringfence target issuers to business giants as a trade-off between market openness and investor protection. Besides, reintroducing weighted voting shares has helped the Hong Kong stock market accommodate certain Chinese business giants’ secondary listings. Although China has introduced weighted voting shares to provide domestic issuers with a new landing zone, this article argues that there is no need or basis for Hong Kong to relax the ex-ante regulation of weighted voting shares.
Original languageEnglish
Pages (from-to)487-512
JournalHong Kong Law Journal
Volume52
Issue number2
Publication statusPublished - 11 Jun 2022

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