Dual-listings ‘dud investors’

The Australian Council of Super Investors claims that shareholder rights are being weakened by the legal structure used by dual-listed companies, such as BHP Billiton, Rio Tinto and Brambles. Dual-listed companies are listed in two countries and have only one balance sheet but two boards and two sets of shareholders.

The ACSI report specifically focuses on the difficulty of takeovers taking place in two different countries with two different legal systems and, potentially, two different languages. The DLC structure makes it unlikely that a target's board approval for a takeover could be achieved. Thus incumbent directors are protected and shareholders disadvantaged because a competing bid and price war are ruled out.

It is also more difficult to replace directors with the size of the vote necessary to convene a meeting doubled to 10 per cent by the DLC structure. ACSI also criticised the Australian Securities and Investments Commission for failing to recognise the threat to shareholder rights and giving dispensations to Corporations Act provisions which allowed BHP Billiton to be listed in Australia. ASIC has not responded on this issue.

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