Chapter Three addresses Hong Kong’s economic function for China after 1997. Beijing’s challenge has been to perpetuate Hong Kong’s role as China’s offshore financial and trading center after the sovereignty handover. After 1997, the US-HK Policy Act allowed the US and the international community to continue treating Hong Kong as an independent trading entity separate from mainland China. Hong Kong maintained its separate membership in international organizations like the WTO, even after China joined those organizations. This continuous special status, conditional upon Hong Kong’s autonomy from Beijing under the One Country, Two Systems, made Hong Kong a conduit and stepping stone for Chinese capital and the elite who sought access to global capital or relocation to other parts of the world. It is also a key to Beijing’s plan to internationalize the Chinese currency Renminbi (RMB) without making RMB fully convertible in mainland China. Hong Kong’s unique offshore financial role for China led to increasing Chinese capital domination in Hong Kong.

Chapter 2 details the history of dual-class stock.Although dual-class stock was commonplace in the United Kingdom in the 1950s-1960s, they had all but died a death by the early 1990s.The underlying influence of institutional shareholders, the principal players on the market, has been apposite, culminating in the FCA’s eventual formal premium tier prohibition of dual-class stock.In contrast, the NYSE, in the 1980s, when institutional investors had less of an influence in the United States, with substantial pressure from large issuers and competing local exchanges, ushered in a largely permissive environment for dual-class stock, after an erstwhile prohibition of the structure. The United Kingdom and the United States have been influenced by the dominant players on the market at the time.In recent years, Hong Kong, Singapore, Tokyo, Shanghai and India, in response to increased global competition, all opened-up to dual-class stock, but with prescriptive mandatory conditions attached to protect public shareholders.Mainland Europe, on the other hand, presents a diverse array of approaches to dual-class stock.The dual-class stock story around the world has not yet been concluded, and as the United Kingdom begins to consider dual-class stock once again, a detailed assessment of the merits of dual-class structure is long overdue.