Retail Investors Will Remain Protected, Says Lau

The Secretary for Financial Services and the Treasury, James Lau, said on Saturday that the rights and interests of small shareholders will still be protected, despite changes to local listing rules that allow for dual-class share structures.

The Hong Kong exchange now allows companies with weighted voting rights – where one set of shareholders hold greater voting rights – to list in the city.

Such structures are favoured by technology start-ups, as they allow for company founders to retain more control.

Lau said corporate governance committees, comprising independent non-executive directors, will keep a “watchful eye” on the overall governance of companies.

He said if the company’s board acts against the interests of the corporation or retail investors, the committee can make recommendations and the board would need to act.

“If they do not comply, they will need to explain why they are not complying with the recommendations of the corporate governance committee,” he said.

Earliest this week, mainland smartphone maker Xiaomi submitted an initial public offering application to the local exchange. Xiami is expected to be the first major company to take advantage of the new rules for public listings.

Bloomberg has reported that Xiaomi's IPO is expected to be worth at least US$10 billion and could value the business as high as US$100 billion.