Letter to Hamish McLeod, Esq (30/1/92) Page 2
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So far So good. The rule changes now go to the SFC for their comments and approval. If they are content with the Stock Exchange's proposal, the way is open for Jardines to go to shareholders and seek their agreement to a secondary listing. That is what we would do.
The SFC will obviously want to study the Stock Exchange proposal, although one hopes that need not take long (despite the Chinese New Year) since the gist of it has been in the public domain for some weeks. I have talked privately to Robert Owen and have so far at any rate identified only one potential problem, but a major one. That is an idea, which is apparently under consideration within the SFC, for requiring a second shareholder vote before a company could terminate a secondary listing.
I have put to Robert what I see
as very strong arguments against such a proposal. In essence I do not see why such a requirement should be thought necessary or what purpose it would serve. My reasons are as follows.
Shareholders are going to be asked to vote on moving the primary listing to London and on the adoption of a secondary listing. They will have the consequences of a secondary listing explained fully to them at that time, including the fact that (as has been the case with all secondary listings in Hong Kong hitherto) the Directors will have the power to terminate the secondary listing after an appropriate period of notice. Any person buying shares in the company thereafter will buy them in full awareness of the position including the "risk" of a Hong Kong delisting. The price of the shares will no doubt reflect that. Should delisting ever happen (and it would certainly not be our intention) then shareholders would still have access through their brokers to several other markets, offering virtually twenty-four hour trading, in which they could dispose of their shares if they So wished.
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In summary, with these safeguards it must be unnecessary to require a second vote of shareholders to confirm a matter which they have already decided upon once. I do not believe that it can seriously be argued that this particular issue is of such over-riding importance as to require - uniquely two shareholder votes.
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I suppose it might be argued that this is all pretty marginal. Is it really such a burdensome requirement to have a second shareholder vote? My answer is yes it is, in the sense that I have a rooted objection to unnecessary
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