Legal Pondering Of The Reform Of The Dual-class Equity Structure

The dual-class equity structure made great contribution to the establishment and the initial development of Chinese capital market. With the development of the stock market, the dual-class equity structure gradually became the systematic obstacle hindering the development of Chinese capital market. The dual-class equity structure separates Chinese capital market, causes the capital market losing its function, poor company management, speculating prevailing, stock price keeping falling. The reform of the dual-class equity structure beginning from 2004 is the fundamental system reform of Chinese capital market. With the guideline of experiments first, then to unfold comprehensively, the reform will complete in batches in the end of 2006. The purpose of the reform is to promote the change of capital market system, to eradicate the circulation system divergence between circulating shares and non-circulating shares, to strengthen the binding system of market to going-public companies. The reform of the dual-class equity structure will re-establish the market confidence of investors, make rational return of market price system, make the capital market function better, improve the quality of shareholders and administrative personnel of going-public companies and the productive forces and achievements of companies, and make positive and far-reaching influence on the market structure, market management and supervision system of stock market and the development of Chinese capital market.The dual-class equity structure is a special phenomenon in China. With the idea of rule of law, scholars propose many rationale theories of the reform of the dual-class equity structure to understand the reform. Recovery theory holds in the angle of history that after free circulation of shares, national shareholders have the duty to make up the circulation shareholders who once paid high cost, emphasizing the protection of public investors. The theory that circulation shares have the right to circulate thinks public investment shares circulate in the market, thus have the right to circulate, the reform is that state-owned shares purchase the right to circulate of circulation shares at certain price to get state-owned shares circulating. Consideration theory deems, in the view of contract, the payment non-circulation shareholders made to circulation shareholders is the consideration to reach the agreement between non-circulation shareholders and circulation shareholders. Public interest theory considers that the aim of the government to initiate the reform at the time of stock price keeping falling, is for the public interest, to balance the interest of different subjects. Compensation theory views that the...