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Why Overseas Shareholders are Treated Differently

It is a fundamental principle, and is enshrined in Rule 2.03(4) of Hong Kong Listing Rules, that “all holders of listed securities are treated fairly and equally”. It is also the first general principle under Hong Kong Takeovers Code that “all shareholders … are to be treated similarly”. It is premised on this fundamental principle that local shareholders and overseas shareholders are pari passu and treated equally in all respects. Overseas shareholders are therefore entitled to all papers and reports, to vote and to all distributions by a listed company in the same way as local shareholders, except for their entitlement to securities that are distributed or offered by a listed company. This article seeks to examine why overseas shareholders are treated differently from local shareholders using a scrip dividend scheme as an example, and whether the current regime is appropriate.