Hamilton Locke congratulates Kelly Partners Group Holdings Limited (ASX:KPG) on implementing its innovative dual-class loyalty share structure following overwhelming support from shareholders as part of KPG’s move from ASX to Nasdaq.
Dual-class voting share structures are common in US capital markets, especially for founder-led companies. However, ASX rules do not permit them (at least not yet) and so KPG could not retain its ASX listing alongside its proposed Nasdaq listing. The new Class B “loyalty” shares will be issued to all shareholders at no cost as a pro rata bonus issue following the company’s delisting from ASX, which is expected to occur before the end of the year once Nasdaq listing approval is obtained.
Hamilton Locke worked with KPG to design Class B share terms to reward loyalty of long term shareholders. The new shares have 10 votes per share and special class rights to appoint up to 3 Class B representative directors on a total board of 6. The loyalty component comes by means of the Class B shares being unlisted and mostly non-transferrable, so that if a holder wants to sell they have to convert the Class B shares to ordinary shares (on a one-for-one basis), which can then be sold on market. The conversion is one way, and ordinary shares cannot be converted back into Class B shares. This ensures that over time the voting power of long term Class B holders will gradually increase as a percentage of total votes as other holders convert their Class B into ordinary shares.
Lead Partner on the transaction, Guy Sanderson, commented: “Kelly Partners Group is a fast growing, founder led Australian company. The time is right for a Nasdaq listing, as most of the company’s investors and growth opportunities are now outside Australia. We were very pleased to be involved in developing the innovative dual-class loyalty share structure which will reward long term holders, and which is a first for an Australian public company.”
The Hamilton Locke team was led by Partner Guy Sanderson, with Senior Associate Palak Thaker and Lawyer Archie Shrotriya.
