1 Asian Corporate Governance Association (ACGA) “ACGA Survey on Alibaba and Non-standard Shareholding Structures in Hong Kong” Press Conference Tuesday, April 15, pm pm CLSA Hong Kong Office Pacific Place, Hong Kong

2 Asian Corporate Governance Association  The Asian Corporate Governance Association (ACGA) is an independent, non-profit membership association dedicated to encouraging and facilitating effective corporate governance improvement in Asia.  ACGA was incorporated in Hong Kong in 1999 to help members understand and influence the corporate governance of Asian companies and markets with a sustainable impact on risk management and long-term value.  We promote a constructive dialogue between key groups including institutional investors, companies, regulators and intermediaries.  ACGA is the pre-eminent provider of expert information and analysis on corporate governance in Asia and is a major instigator of positive improvements in corporate governance in the region.  ACGA now has over 100 members all around the world with a total AUM of more than US$14 trillion. ACGA is the only regional non-profit dedicated to implementing effective corporate governance in Asia

3 Survey Background  On September 25, 2013, Charles Li, fueled the debate on “non-standard shareholding structures” in Hong Kong with an article titled, “Voices on investor protection”.  Li’s blog piece followed efforts by Alibaba to explore a possible listing in Hong Kong with an unusual partnership control structure.  ACGA decided in late 2013 to conduct a survey to gauge the views of our members from different regions on this issue.  The survey was tested with a group of global institutional investors in November 2013 and formally sent out in December.  Questionnaires were completed during December 2013 and January 2014.

4 Key issues Our survey and research focused on eight key issues: 1.Investor perceptions of the importance of fair treatment of all shareholders 2.Investor acceptance of dual classes of shares 3.Investor acceptance of special partnership structures 4.The performance of the government and regulators on the Alibaba issue a)Hong Kong Government b) Securities and Futures Commission c) Hong Kong Exchanges and Clearing 5.Whether it is possible to define an “innovative company” 6.Whether the Listing Rules should be amended for “innovative companies” 7.Whether investors would discount Alibaba if it listed with a non-standard shareholding structure 8.Whether investors would discount the Hong Kong market generally if listings with non-standard shareholding structures became common

5 Respondents The 54 respondents comprise a significant group in terms of size and expertise in corporate governance and regulatory issues. As a group they have:  Combined assets under management (AUM) globally of more than US$14 trillion.  An average AUM per respondent of around US$259 billion, with a range from a few hundred million dollars to US$4.3 trillion.  Diversified locations, including Asian countries, European countries, North America, Australia and New Zealand.  About 56% of respondents have their headquarters or offices in Hong Kong.

6 Key findings  Overwhelming support for fair treatment of all shareholders and opposition to dual classes of shares and the proposed Alibaba partnership structure.  Investors would likely apply a significant discount (average of 19%) to Alibaba if it listed with its special partnership structure.  Investors would also likely apply a significant discount to the Hong Kong market (average of more than 13%) if non-standard shareholding structures became common.  HKEx was rated the worst performer among major Hong Kong government and regulatory authorities in terms of its handling of the Alibaba issue.  Allowing corporate governance exemptions under the Listing Rules for so-called “innovative companies” sets a bad precedent and will undermine investor protection.

7 Question 1 How would you rate the importance of fair treatment of all shareholders in a market? Responses: a.Very important:54 (100%) b.Important:0 (0%) c.Not important:0 (0%)

8 Question 2 Are you in favour of listed companies having structures with dual classes of shares with controlling shareholders having more votes than other shareholders? Responses: a.Yes:0 (0%) b.No:53 (98%) c.Undecided:1 (2%)

9 Question 3 Are you in favour of listed companies having non-standard partnership structures, with partners representing management retaining the right to nominate a majority of the board of directors? Responses: a.Yes:0 (0%) b.No:51 (94%) c.Undecided:3 (6%)

10 Question 4 How would you rate the performance of the following Hong Kong regulators, respectively, in their handling of the Alibaba case? Please choose "good", "fair", "bad" or "no opinion" for each. Responses: RateHK GovernmentSFCHKEx Good2 (4%)22 (41%)6 (11%) Fair5 (9%)8 (14%)12 (22%) Fair to bad*--2 (4%) Bad2 (4%) 15 (28%) No opinion45 (83%)22 (41%)19 (35%) *Two members rated ‘fair to bad’ depends on different further developments of the case.

11 Question 5 Can you define an "innovative company"? Responses: a.Yes:14 (26%) b.No:33 (61%) c.No opinion:7 (13%)

12 Question 6 Does Hong Kong need to amend its listing rules to allow non-standard shareholding structures for "innovative companies"? Responses: a.Yes:1 (2%) b.No:46 (85%) c.Don’t Know:7 (13%)

13 Question 7 What discount would you apply to Alibaba if it listed with its special partnership structure? Responses:  A specific discount or discount range*:20 (37%)  A discount, but unquantified:15 (28%)  Not purchase at all: 3 (6%)  No discount: 2 (4%)  No opinion: 14 (25%) In total, 38 (71%) * Average discount rate is almost 19%, range from 5% to 50%.

14 Question 8 What discount would you apply to the Hong Kong market if non- standard shareholding structures became common? Responses:  A specific discount or discount range*:13 (24%)  A discount, but unquantified:14 (26%)  A discount on company basis: 4 (7%)  Not purchase at all: 2 (4%)  No discount: 4 (7%)  No opinion: 17 (32%) In total, 33 (61%) * Average discount value is more than 13%, range from 10% to 25%.

15 Contact Details Jamie Allen Secretary General Michael Cheng Research Director, China & Hong Kong Asian Corporate Governance Association Ltd Room 1801, 18 th Floor, Wilson House Wyndham Street, Central, Hong Kong Tel: (852) (D) / (D) Fax: (852) Website: