The Australian Securities Exchange (ASX) is once again facing opposition from investors as it revisits plans to allow dual-class share structures—an approach aimed at reviving its sluggish initial public offering (IPO) market. Critics argue that such a framework would concentrate too much control in the hands of select shareholders, especially company founders, at the expense of broader investor rights.
ASX disclosed to Reuters in March that it’s considering aligning with global financial hubs like New York and London by permitting companies to list with multiple share classes that carry different voting powers. Dual-class listings are often favored by founders and executives seeking to retain control post-IPO, but the concept is controversial—seen by many as a threat to shareholder democracy.
The exchange last explored the idea back in 2007, but scrapped it following significant resistance from fund managers. Now, amid the weakest pipeline of new listings in two decades and regulatory pressure to reform, the ASX is revisiting the concept. However, the challenge remains steep.
“There’s still widespread resistance to dual-class structures,” said Hugh Dive, Chief Investment Officer at Atlas Funds Management, which oversees A$200 million in assets. “We’ve already dealt with several founder-led governance failures in recent years. Allowing founders 10 times the voting power of other shareholders creates unacceptable governance risks.”
Fund managers warn that unless dual-class shares are priced at a steep discount during IPOs, they’re unlikely to gain traction with Australian investors. The hesitancy is further fueled by recent controversies involving founder-led companies such as WiseTech and Mineral Resources, which have heightened sensitivity around corporate governance.
“We’d be reluctant to support anything that disadvantages retail and institutional investors relative to founders,” said Catriona Burns, lead portfolio manager at Wilson Asset Management.
Still, ASX executives say the current market climate demands innovation. Blair Beaton, the exchange’s group executive of listings, said many tech companies—often proponents of dual-class structures—are opting to list offshore due to the ASX’s current limitations.
“We understand there are mixed views on this,” Beaton said. “But it’s important to continue gathering input on how we can maintain a globally competitive and vibrant listings environment.”
Australia has had its slowest year for IPOs in over 20 years, according to data from LSEG. Virgin Australia is reportedly exploring a return to the ASX through a public listing, though specifics remain under wraps.
In February, the Australian Securities and Investments Commission (ASIC) called on the ASX to streamline its listing process as part of broader efforts to rejuvenate the capital markets.
Patricia Paton, a partner at corporate law firm Ashurst, welcomed the ASX’s willingness to explore structural changes, noting that dual-class shares should be part of a broader strategy. “With companies now having multiple avenues to raise capital globally, it's vital for ASX to remain a compelling option,” she said.