Weighted voting right system for listings in Hong Kong

The Stock Exchange of Hong Kong (HKEx) officially released in April 2018 the Consultation Summary of the Listing Regime for Companies from Emerging and Innovative Sectors. The amendments to the listing rules on the acceptance of listing of companies with weighted-voting-right (WVR) structures included in the Consultation Summary have been in effect since April 30. The move meets the urgent need of innovative companies to gain control through such structures. With the implementation of the Consultation Summary, Xiaomi Corporation and Meituan Dianping, all of which have WVR structures, have gained HKEx listings. This article provides a brief analysis of the HKEx’s listing requirements for entities with WVR structures.

Required qualifications. The HKEx stated in the Consultation Summary that a company hoping to list in Hong Kong under a WVR structure must be able to demonstrate a number of characteristics, including its nature, success of its business, contribution of the structure’s beneficiaries and their roles, and external validation.

Expected market capitalization. The specified minimum market capitalization of a company, with a WVR structure, is HK$10 billion. If a company’s market capitalization is less than HK$40 billion, it is required to have post revenue of not less than HK$1 billion in the last audited financial year before listing. There are no further requirements for a company with a market capitalization of more than HK$40 billion.

Fan Xingcheng is leader of China capital market practice and a senior partner at Dentons