As discussed in our prior post, SGX has sought input from stakeholders on possibly allowing issuers to adopt dual class share (“DCS”) structures for newly listed issuers. SGX set out a “straw man” proposal on potential additional admission criteria “to help respondents concretise the types of companies that may be admitted using the DCS structure.” These criteria included:


  • A minimum S$500 million market capitalisation threshold,
  • A minimum level of participation by “sophisticated investors” in the initial public float (i.e. 90%), and
  • A “compelling reason [to have a DCS structure] based on holistic assessment of various factors such as industry and operating track record”.

In our submission, Glass Lewis opposed the introduction of DCS structures in Singapore. As a starting point, Glass Lewis is strongly in favour of the “one-share-one-vote” principle. Shareholders do and, in our view, should take a limited role in the operation of the Company. Management, at the direction of the board, is there to operate the business. However, on matters of governance and shareholder rights, we believe shareholders should have the power to speak and the opportunity to be heard and effect change if necessary. That power should not be concentrated in the hands of a few for reasons other than economic stake.

We acknowledged the benefits that were potentially associated with DCS structures such as fostering innovation, market competitiveness and alignment of interests between managers and shareholders. However, we noted that these potential benefits came with significant potential drawbacks and risks, not just to shareholders in SGX-listed companies but also in the wider Singapore economy. Additionally, we noted that the potential benefits could be accomplished through other means than through introducing a DCS structure listing regime.

Finally, Glass Lewis identified shortcomings with the “straw man” proposal including arbitrary thresholds that could result in perverse incentives for intermediaries as well as risks relating to disputes over subjective eligibility requirements, among other concerns. More broadly, we were concerned that the proposed safeguards would not reduce the risks of disenfranchising shareholders by undermining the “one-share-one-vote” principle.

The consultation paper can be found on the SGX website.

The full Glass Lewis submission is available to download below.

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