Hong Kong Securities and Futures Commission: Expected to relax restrictions on dual-class shares this year to ensure that the interests of small shareholders are not deprived.

The Chairman of the Hong Kong Securities and Futures Commission, Carlson Tong, said in a media interview that the Hong Kong Stock Exchange (00388) and the Securities and Futures Commission of Hong Kong are expected to consult on optimizing the regulations for dual-class share listings this year, paving the way for Chinese companies listed in the US to list in Hong Kong. Regarding the possibility of relaxing the limit on voting rights ratios under the dual-class share system, Tong reiterated the principle of ensuring that the interests of minority shareholders are not deprived. As for whether the definition of "ShenZhen New Industries Biomedical Engineering" can be expanded, Tong said that when expanding, measures must be taken to avoid companies being misrepresented. Tong further stated that with the rapid development of technology, the definition of "technology" needs to be redefined. The biggest challenge in reviewing the weighted voting rights structure (WVR) lies not only in the voting rights issue, but also in accurately defining "innovative technology." He emphasized that after redefining, measures must be taken to ensure that ineligible companies are not included in the system due to relaxed standards. "When reviewing the system, the Securities and Futures Commission of Hong Kong focuses on market fairness and the consistency of the WVR sector, and comprehensive discussions must be conducted." In the past few months, there has been an increase in discussions about relaxing the regulations on dual-class share structures, with some legislators calling for a "grace period" for companies already listed overseas to adjust their WVR voting ratios to comply with Hong Kong requirements. Tong did not disclose the details of the consultation, only mentioning that comprehensive discussions are still needed to balance the interests of minority shareholders. Speaking about the recent excitement in the new stock market after reforms in pricing and allocation mechanisms, Tong pointed out that the adjustment of the clawback mechanism is aimed at ensuring fair distribution of shares between institutional investors and retail investors, with the principle being that the Securities and Futures Commission of Hong Kong trusts that professional institutional investors can play a positive and healthy role in the IPO pricing process. If this premise is not met, the mechanism needs to be reexamined.