Dual listing

A dual listing of a company is a way for a company to have two equal listings (neither being a secondary listing) in different markets.

The usual way in which this is done is by creating an ownership structure of two holding companies, each of which is listed in a different market. These then own 50% each of the group of companies that is the actual business.

The commonest reason for a dual listing is a need to list in two different countries. This may happen because of:

  1. a merger of companies listed in different countries, or,
  2. a new listing to gain access to capital from a larger market.

The best known examples of the first of these are the Anglo-Dutch groups Unilever and Reed Elsevier. What was once the most prominent example, Shell, is no longer dual listed.

The second are typically companies that are already listed in their home country which, as they get bigger, find it useful to have access to the the larger amounts of money they can raise in larger markets. In the interests of their existing (home country) shareholders they need to retain their original listing.

The importance of some dual listings has diminished a little as it has become easier and cheaper for even private investors to trade in foreign markets.

Dual listed companies have special corporate governance requirements. The interest the shareholders in each of the listed companies have in the business is the same. This is usually addressed by guaranteeing equal rights in all respects (most importantly voting rights and dividends) and by an appropriate management structure (such a unified board). This implies contracts between the two listed companies and appropriate internal structures within each company.

Some problems can occur with dual listings. For example:

  • the shares may trade at a discount in one market,
  • the shares may be less liquid in one market,
  • The complex legal aspects of the structure may add bureaucracy.
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