China’s $59 billion answer to Zillow (ZG.O) has an opportunity to remodel its corporate governance. The founder of online real estate broker Ke (BEKE.N), Zuo Hui, left behind a 39% economic stake and 81% of the voting rights when he died last month. There's no good reason for a family trust to wield such feudal control. Converting the shares to common ones would be the right thing to do.
. In Ke’s case, Zuo’s death provides an excuse to scrap the arrangement sooner rather than later. He isn’t around anymore to be a guiding force. No one else deserves such power. Even converting the shares to one vote each would keep control concentrated, but at least on a par with the economic stake.Colin Huang, increasingly stepping back because of greater regulatory scrutiny, Ke could blaze a governance trail for others to follow in a lasting honour to Zuo’s pioneering legacy.
- The company also said it would implement “certain pre-planned contingency arrangements” with respect to class B shares held through a holding company owned by Zuo via a family trust, and make an announcement at the appropriate time. - It added that Ke’s executive directors and executive officers, as well as Propitious Global Holdings Limited and the family trust administering its shareholding interest, would not sell, transfer or otherwise dispose of any of Ke’s ordinary shares or American depositary shares for a 365-day period.
- As of February, Zuo controlled 81.1% of the voting power through a dual-class share structure, according to Ke’s 2020 annual report.Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
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