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Possible Listing Framework for Dual Class Share Structures

Letter to Singapore Exchange Limited, 6 April 2017

6 April 2017

We refer to your Consultation Paper of 16 February 2017 on a Possible Listing Framework for Dual Class Share Structures, and would like to take this opportunity to thank you for the opportunity to contribute our perspectives.

Norges Bank Investment Management is the investment management division of the Norwegian Central Bank (Norges Bank) and is responsible for investing the Norwegian Government Pension Fund Global. The fund was invested in asset of USD 873 billion as of the end of 2016 of which USD 2.7 billion (SGD 3.9 billion) was invested in equities listed in Singapore.

We are a globally diversified investment manager with an equity portfolio consisting of minority stakes in listed companies. We have a substantial presence in all major equity markets globally, including in Asia, and we are a member of the Asian Corporate Governance Association (ACGA).  We regard the protection of minority shareholder rights as a necessary requirement to safeguard and promote the fund’s financial interests. As such, issues concerning the treatment and rights of different shareholders are of interest to us.

With regard to Question 1 (overall framework of dual class share structures), we advise against the admission of dual-class shares on the Singapore main market. The Singapore market today stands out as a high-quality market place characterised by strong protection of shareholders. This competitive advantage for Singapore as a financial hub will be significantly diluted should the SGX open up for mediocre corporate governance and shareholder protection on the main market.

We recognise that there is an international competition for stock market listing. However, we caution against responding to this competition by lowering the quality standards of markets such as the protection of shareholders.

With regard to Question 2 (additional listing criteria for dual class share structures), we believe that in the long run, the three possible listing criteria mentioned (a-c)will not provide effective safeguards against weakening shareholder rights.

If companies with dual-class share structures were to be accepted, they should be listed on a separated secondary market, where it is made clear to market participants that they have to accept lower-quality corporate governance, with distinctly weaker protection of shareholder rights. Only in this context would the additional listing criteria mentioned above be appropriate.

We believe that dual class share structures will lower the standards of the Singapore Exchange and undermine your ability to compete globally for equity listings.

We remain at your disposal should you like to discuss these matters further.


Yours sincerely

Petter Johnsen
CIO Equities

Peter Gjessing
Senior Analyst

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