The Voting Shares Of Class In China

In recent years,innovative companies,such as baidu, 58 city, have adopted the dual-class share structure in American Stock Exchange. Dual-class share structure gradually into the public view. Alibaba has IPO consulted in the Hong Kong Stock Exchange and then have gone to the US Stock Exchange. This event led to a domestic discussion about application or the abolition of dual-class share structure.In traditional company law concept, the right of share include the right of property rights and corporate governance rights. It is because of this kind of idea and the commercial practice, many other countries established the category stocks system. Category stocks means there is a clear distinction between the different shares in the right of control and the property. Category stocks play a huge role in corporate finance and meeting the demand of different investment.Dual-class share structure is the kind of category stocks. Dual-class share structure is the expansion of the voting rights for shareholders, meanwhile limiting the ordinary shareholders’ voting rights. Dual-class share structure means that a company to list its common shares into class A and class B. A class common stock follow the principle of "one share, one vote" regulation, the right of voting of class B common share is a multiple of class A common stock.Company’s founder holds B class common stock, this kind of share can not publicly trade. Once B class stock transfer, it must be replaced to Class A common stock.. Throughout most of the world, this category stocks with limiting of voting right is authorized by law in the enclosed company. However, based on the protection of the interests of public investors, whether public companies can apply to dual-class stock, different countries have different attitude.Alibaba, E-commerce industry leader in China, wanted to list in Hong Kong by dual-class share structure. But the Hong Kong stock exchange refused, because of the protection of public investors. while Hong Kong stock exchange realized the importance of dual-class share structure.Application of dual-class share structure has the risk of damage the interests of investors. However, this share structure has been recognized to varying degrees on the world stock market. So Dual-class share structure has some practical needs. With the integration of capital markets and international capital flows, china’s SFC, stock exchanges can’t only see the disadvantages of dual-class share structure, and totally reject this share structure. We should analysis the reasons of application of dual-class share structure, Sorting out it’s pros and cons, and validating the risk control.On the one hand, dual-class share structure has real needs, on the other hand, this share structure will easily lead to moral hazard. So we need to consider our actual situation restricting dual-class share structure and innovating the rule of dual-class share structure.In summary, it is necessary to perfect the legislation of category stocks and research dual-class share structure. we should learn from foreign advanced legislative experience of the voting shares of the category combined with our specific needs and the actual situation, establishing appropriate rules of dual-class share structure.We have few monographs about dual-class share structure. Multi-published study focused on the practice need of dual-class stock structure. They considered that dual-class share structure not only promote the development of innovative enterprises, but also meet the investment needs of different investors. While author study the the connotation and theoretical basis of dual-class structure. The author think that dual-class share structure is category share of voting rights. This share structure is widely recognized in the United States, Japan and other countries. Dual-class share structure has caused great controversy ground in china. The reason is our country always followed the "one share, one right" regulation. But we should see that foundation of “one share, one right”regulation is changing. In addition, the author also set out a series system risk of dual-class stock in detail in the process of existence. We should see the advantages and risks of this type of share structure, examining defense mechanisms of risk and putting forward their views and suggestions. Content in this article has some innovative. Overall, the paper sort out the history of dual-class share structure, revealing the essential attribute of dual-class stock structure, and also listing the legal risks of dual-class share structure. Finally, the paper found that the contradiction between the management and ordinary investor are not irreconcilable.This paper mainly divided into the following five parts:The first part, introduces the dual-class share structure in detail, Including the connotation of dual-class stock structure and the history of dual-class share structure. The first section, overview the meaning of dual-class stock structure, and the difference with the traditional single shareholding pattern. Revealing the essence of dual-class stock structure, is voting rights category stocks. This kind of stocks has been affirmed legislation of most countries. Section II, combs the history of dual-class stock structure from generation to controversy, then Increasingly unified.The second part analyzes the theoretical basis supported by dual-class stock structure, including the company’s contract tree theory, the theory of shareholder heterogeneity and the theory of equity in property rights and the right to vote separable. Those theory provide a theoretical basis for further exploration of the dual-class stock structure.The third part, analysis the value of dual-class stock structure, mainly on the controversy of dual-class stock structure, further exploration of dual-class stock structure. The first section, lists the system risk of dual-class share structure in detail. Section II analysis necessary of applying for dual-class share structure, and highlights the focus of controversy abolition of dual-class stock structure through the comparative study.The fourth part, introduces the existing barriers and applicable space of dual-class share structure in our country. Detailed analysis the system obstacle of applying dual-class share structure at this stage in china. At the same time, we also finding that the current system environment is changing, dual-class share structure still have applicable space. This play the foundation of following legislative proposals of dual-class share structure.The fifth part, puts forward suggestions about applying dual-class share structure in China. The first section, considering the institutional environment in china, we should be regulated by applying to dual-class stock structure. The second section, puts forward that we also should strengthen the supervision of the founder shareholders, in order to avoid the risk of agency costs. The third section, proposes to strengthened to protect the interest of public investors.Of course, due to the subjective and objective factors, this paper have the following problems: firstly, the lack of empirical analysis of dual-class share structure in foreign country. Secondly, the lack of specific regulatory measures to dual-class share structure about regulatory authorities.