In order to protect shareholder's interests, the United States allows companies to have dual share structures but with additional safeguard measures, Mary Schapiro, former chairwoman of the Securities and Exchange Commission, told South China Morning Post.
She will be meeting Securities and Futures Commission (SFC) chief executive, Ashley Alder, and other high level executives today in Hong Kong and declined to comment on what local regulators should do with regards to calls for the introduction of dual share structures and gave a quick overview on her experience.
Tension over the topic is mounting after the Securities and Future Commission last month declined to provide a waiver to mainland e-commerce giaant Alibaba's strategy to nominate a majority of directors from its 28 partners which the SFC clearly stated out that this violated the one vote, one share principle.
"It is not to say whether the US way or the Hong Kong way is better. While the US allows some tech companies to have a super-voting share structure, it has a lot of compensation mechanisms to protect the interest of small shareholders," Schapiro said.
With that in mind, such measures include the fact that its directors have fiduciary duty to protect the interests of shareholders. As US laws also allow investors to take class action lawsuits against a company or its directors to protect their rights, whilst Hong Kong law does not.
"Documentation was also more demanding in such structures. The US market is taking a broader view of corporate governance to ensure fair treatment to shareholders and the transparency of the company", Schapiro said. Additionally, super-voting rights may also have an expiry date.
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