The Localized Legislative Conception Of Dual-Class Share Structure

In recent years,many domestic enterprises have chosen dual-class share structure model for overseas listing.From October,2004 to December,2014,30 Chinese enterprises adopted this equity structure for their listing in the NASDAQ and the NYSE in the United States.Dual-class share structure is very popular because it can satisfy the founding teams’ need to expand their enterprises through public financing and their requirement to keep control of these companies at the same time.Therefore,it is fit for innovative enterprises,for example,Internet companies,which heavily rely on core leaders.In view of the advantages of dual-class share structure and the rapid development of Chinese Internet companies and other innovative enterprises,it became an urgent question whether dual class share structure should be localized.Those local enterprises which intend to come into the capital market through this structure would be attracted and be listed in domestic exchange.In addition,the study on localization of dual-class share structure not only enriches the theory of ownership structure in China,but also provides references and advices for the legislative and judicial practice of this equity structure in China.This paper has five chapter in addition to the introductions:Chapter One is an overview of dual-class share structure and its localization.First,this section defines the concept of dual-class share structure,its characteristics and implementation approaches.In this paper,the concept of dual-class share structure is limited in a narrow sense which doesn’t include the preferred stock.And its implementation approaches are restricted in four kinds according to this concept.Secondly,this paper introduces the value of dual-class share structure which is generalized as follows: for a long-term development,the interests of the controller,to prevent a hostile takeover and personal preferences,etc.And the criticism of the value of this equity structure is summarized as: the supervision of company management,shareholders’ rights and interests of the company as a whole to ensure there is a negative impact.Finally,this paper introduces double meaning with the localization of dual-class share structure,basic principles and implementation path.Through the analysis of the legal meaning localization,localization of dual-class share structure has two layers of meanings: one is that we should introduce this equity structure into Chinese legal system;the other is in the process of introducing our country need to make a corresponding adjustment according to the situation in China and the system improvement to fuse native resources in China such as the problems of capital market.And the process of localization should follow three principles including: the principle of adjustment measures to local conditions,the principle of democracy and legal principle and draw lessons from Singapore’s specific path from public consultation to the legislative changes.Chapter Two introduces and combed the disagreement about the localization of dual-class share structure.According to different attitudes on localization of dual-class share structure,it could be summarized as affirmation and negation.There is just one problem need to solve whether dual-class share structure should be localized into China in this section.This paper argues that dual-class share structure should be localized into China and the reason is that: First,dual-class share structure has its values;Second,‘one share,one vote’ principle is just a periodical principle in company law field and it’s could be break;Third,the risks of dual-class share structure could be eliminated through the system design;Fourth,some argues against the localization of dual-class share structure has changed.Chapter Three is the introduction of the legislative model of dual-class share structure and its enlightenment for China.First,it recommends two typical legislative modes(the right to vote to legalize models and stake species liberalization)and which country uses these modes respectively.Then,it selects the two modes of the type-the practice of Germany and the United States condition is presented.Finally,it concludes four advises for the localization of the dual-class share structure.Chapter Four analyzes the necessity and feasibility of localization of dual-class share structure.Necessity is reflected in double localization equity structure is helpful to perfect our country multi-level capital market,attract high-quality enterprises listed on the domestic and promote the long-term development of the enterprise.Feasibility includes three points: there are spaces for dual-class share structure in our current legal system;there are the practical experiences for this equity structure;the promotion of theories understanding on the dual-class share structureChapter Five concludes the legislative pattern,principle and details of dual-class share structure on the basis of summarizing the full text.First,it demonstrates that it’s more suitable for China’s national conditions to adopt the liberalization of kinds of share legislative model.Second,it views that this law should be complementary principle and public investors protection principle.Finally,it put forward five suggestions including: limiting the scope of application of dual-class share structure,building restriction mechanism of multiple-voting rights,perfecting information disclosure system,improving the system of investor protection and perfecting independent board director system.