There has been a lot said and written about investor protection, share structures and voting rights in Hong Kong in recent weeks.

The other night, as I dozed off, I kept hearing these voices arguing endlessly. This is how my dream went.

The first voice I heard was that of Mr. Tradition. “Our reputation for investor protection is what makes our market so successful. We have clear rules in Hong Kong and they apply to any company that wants to list. We are continually ranked as one of the top financial centers in the world and were first in IPOs only recently. We clearly don’t have any problems attracting issuers. If it isn’t broken, why fix it?”

Then Mr. Innovation burst in. He’s a young man with spiky hair, who talks fast and excitedly.  “Give us a break, Mr. T! What’s wrong with different share structures? Most other exchanges in the world permit them. It’s just you Hong Kong sticks-in-the-mud who can’t accept change. Look at the technology companies listing in the US. Most of the biggest ones, like Google and Facebook, protect the founder’s position with special voting rights. People invest in these companies based on the founder’s vision, track record and reputation. The founder has the long-term interest of the company in mind, and that’s better than a bunch of hedge funds arbitraging the shares or corporate raiders buying into companies thinking they know how to run them!”

As Mr. Innovation ran out of breath, Mr. Disclosure piped up in a steadier tone. “Calm down, Mr. Innovation. The issue is not who is better, innovative founders or activist investors. It is about disclosure. The regulator’s job is to ensure full and fair disclosure and to penalize abuses. Don’t forget, investors will simply price these companies at a discount to reflect the less-than-equal voting rights of their shares. Let the market decide what the right price is when founders ask for a special voting structure. This system works well in the US, largely because of the large sophisticated institutional investor base there and the aggressive litigious culture of class actions. As such, the US system provides important deterrent forces that can offset the negative impact of the different weight in share rights. It’s time for the Hong Kong market to modernize.”

What investors want?

“Wait a minute,” I heard another voice interrupt. “You guys keep talking about protecting investors. Did anyone actually speak to investors to find out what they really want?”

“Great idea!” all the voices agreed.

First off was Mr. Big Investor. “I don’t care too much whether a company is listed in Hong Kong or New York since I can invest anywhere. I only care whether it’s a good company. I don’t like disproportionate voting rights, but if you must have them, I know how to value them.”

Then Mrs. Small Investor chimed in. “I can’t invest in the US market, so if it is a great company, don’t take that opportunity away from me, please! But I really don’t like companies with special rights. It isn’t fair. I want the regulators to look after my interests.”

Then I heard another voice. It was Mrs. Practical. “Boys and girls, let’s get real! People in Hong Kong have always taken a practical approach and made bold moves. We took a chance on H shares and Red Chips. We even took a chance on private enterprises. And we have been very successful. Let’s just get on with it. If we miss out on the next wave of big listings from China’s mainland, just think what we’re all going to lose! The government will lose its stamp duty, brokers will lose hundreds of millions in commissions and the investing public will lose the opportunity to invest billions of dollars in fast-growing and iconic companies! Hong Kong can’t afford to miss out on all of that!”

Oh dear, somebody didn’t like that at all. It was Mr. Righteous. “It’s perfectly simple: one share, one vote. How dare anyone suggest the founder is so special! The founder grows old, don’t forget. Would you let him entrench himself and extract benefits from the company forever? Would you sell Hong Kong’s soul just to win one or two big listings? Why should we learn from the Americans? Look at what they did to the world in the financial crisis with the so-called financial innovation of Wall Street. If anyone doesn’t like what we’ve got in Hong Kong, they should just pack up and leave.”

The conversation became uncomfortably tense. Then Ms. Future tried to lower the temperature. “The world is changing, and so should Hong Kong. We missed the technology revolution a decade ago. Looking into the future, there’s a wave of new economy companies, particularly in the Internet space, that may fundamentally reshape the entire economic landscape of China over the next decade. This could be Hong Kong’s chance to claim true global leadership by combining China with technology and the new economy.”

She pointed at Mr. Righteous. “It’s okay for you because you’ve already made it. But think about my generation in Hong Kong.”

Mr. Righteous bristled in response. “But why does this future of yours have to have special rights for founders?”

Ms Future shot back. “If the only way to secure the listing of these companies is to allow special rights for founders, so be it. You have no right to deny us the opportunity. These innovative companies are growing so fast they are threatening — and could possibly overtake — traditional businesses listed on our exchange. Do we want to pass on these companies and plant our flag firmly in the past?”

Due process

I was beginning to sweat. My dream was rapidly turning into a nightmare. Then I heard the calm voice of Mr. Process.

“Okay, let’s not get carried away! The issue is not about who is right and who is wrong. The issue is not whether a particular share structure is good or bad. The issue is not about who can create or destroy value — founders or activist hedge funds. The issue is not about whether Hong Kong should embrace tomorrow or stay in yesterday. This is all about due process. Hong Kong’s listing rules are clear. If there is a need to change them, we should do it via due process. If we chop and change our regulations to fit whoever comes along, we will lose all credibility. What is due process? Well, it means that if a company is asking for something narrow, modest and balanced that can be reasonably dealt with within the letter or the spirit of the overall listing regime as it currently stands, waivers or permissions can be allowed. We should also consider whether any discretion we exercise can be articulated clearly as a precedent. Regulators need to draw a clear line for future listing applicants seeking similar treatment to follow.

“If, however, what is asked for is beyond this narrow space of discretion permitted under the rules, then such significant changes to the rules and policies should be adopted only after proper consultation with the community so that they will stand the test of time.”

The discussion seemed to hit a stalemate.

“Why don’t we call on Mr. Solution?” someone suggested. “Great idea,” everyone agreed.

And then I woke up!

In real life, I said to myself, there is no Mr. Solution. We have to make the decision ourselves, drawing on the wisdom of the community as a whole. We need to look objectively at the issues and not be swayed by emotional arguments or be distracted by specific circumstances of any given company.

The article was first published on the blog of Charles Li on hkex.com.hk. Shanghai Daily edited it for length.