Bursa mulls dual-class share structures

KUALA LUMPUR: Bursa Malaysia said it is considering whether to allow companies with dual-class share structures.

If the bourse operator goes ahead, it would be the third Asian jurisdiction — after Singapore and Hong Kong — to take a close look at the contentious issue, opening another front in the battle over shareholder rights.

The structures give company founders and leaders outsized powers that are seen by investor advocates as undermining the “one share, one vote” system of corporate governance.

Approval by Bursa Malaysia would mean opponents of the structures would face an increasing number of stock exchanges willing to list firms with multiple classes of stock.

“We may undertake a study on its feasibility and whether such a structure is suitable in the context of our capital market,” said Bursa Malaysia this week in an emailed response to Bloomberg queries.

“Bursa Malaysia is always open to exploring new areas in developing our market to ensure that we remain competitive.”

The debate over multi-class shares intensified in recent weeks after index compilers FTSE Russell, a unit of London Stock Exchange Group Plc, and S&P Dow Jones Indices placed restrictions on such structures, under pressure from clients whose trillions of dollars track their gauges.

“Bursa Malaysia has worked very effectively to improve the governance foundations of the market, but even Bursa cannot resist the pressure to consider dual-class shares if Singapore and Hong Kong exchanges convince themselves that quantity of initial public offerings matters more than quality of the overall market,” said Melissa Brown, partner at financial advisory firm Daobridge Capital and a former member of Hong Kong exchange’s listings committee. Bloomberg