Dual-class shares won’t fix Australia’s IPO slump
Dual-class shares are a sugar-hit solution that risk diluting investor rights and diverting attention from genuine market reform.
Much has been made of the declining number of listed companies in Australia and the need for a policy reboot to kickstart the IPO market. The issue has both cyclical and structural elements that shouldn’t be ignored.
ASIC’s proposed framework for private markets is a positive step. So too is the debate about better rules for listings and disclosure, and the freshly reported consideration of simultaneously floating and listing software company Rokt in Australia and the US under a single prospectus.
It’s important that any resulting ASIC reforms are available across all Australian listing markets. Moreover, we shouldn’t confuse the serious challenge of persuading companies to go public rather than stay private with quick-fix sugar hits.
ASX’s plan to introduce dual-class voting shares was one such ‘sweetener’.
A rush to bundle a range of complex policy matters with the consideration of dual-class voting shares will likely result in more James Hardie-like controversies, greater disenfranchisement of minority investors and no measurable increase in listings.
