Interest Conflict And Balance Under Dual-class Share Structure In Listed Companies

For a company limited by shares,it seems there is always a contradiction between fundraising and control maintaining over the company.In accordance with the capital majority rule,the results of a general meeting are entirely up to the proxy voting system to some degree.What's more,the system has already become the vital factor which influences the economic situation.During the development of a company,fund raising is needed constantly,while the major controller's power shall be weaken or ever lost in such proceeding.However,if the number of shares in the secondary market is strictly limited based on the considerations of the control factors'stability,then it would be generated a problem of shortage of market liquidity.Dual-class share structure,which adopts specific institutional arrangements,provides a new perspective for the ways to settle the aforementioned contradiction.It is that management and other general shareholders have same cash flow right but different voting,which may effectively resist the attack from barbaric capital.Dual-class share structure is a kind of special share structure,which is different from the traditional structure-one vote per share.Under the structure,the founder shareholders with smaller shareholding ratio can hold the effective control of the company.And it will not have much effect on the stability of controlling status,so that it can greatly ease the tension between fundraising and control maintaining.With the original hypothesis of shareholder group homogeneity being broken,shareholder heterogeneity theory is more and more accepted.Besides,innovations in the financial field have a great impact on existing theory and practice of corporate govermance.The dual ownership structure,which already exists in practice,has been commonly accepted and used by more and more companies of many countries and regions around the world.Among them,various interest conflicts and balance mechanisms related to this structure attract much attention at present.In essence,the design of the legal system is a benefit measuring game,which is impossible to achieve risk-free.The criteria for rationality is based on the practicalities of maximum protection and minimal damage of interest.The ideal state should be a situation that the risk allowed by law can be minimized,and the possible loopholes in the legal system can cause less damage to legal interests.In view of this,the main idea in this paper is that considering the difference of distribution for the internal shareholders between the right and the risk burden under the dual-class share structure,whether it can be properly corrected and balanced through the design of supporting system.With the emerging market need to corporate governance,how to figure out the balance of reform and development and investor protection is the important subject needed.With the conflict and balance of interest as the angle of view,this paper attempts to analysis the complex interest relations and logical structure of its association interaction under dual-class share structure,and to find the crucial point among the interest conflicts.This paper is divided into five parts,and its content is as follows:Chapter 1:"Real dilemma:the dilemma of capital demand and control." This chapter mainly analyzes the contradiction between fundraising and control maintaining over the company.Considering the change of the current theory and financial practice area,the voting right is the breakthrough to solve the problem.Chapter 2:"Dual-class share structure:the weapon to the weighing problem of fundraising and control maintaining over the company." This paper draws out the basic connotation of the dual-class share structure,the current situation in domestic and foreign legislation,and the way to accomplish the structure.Chapter 3:"Conflicts of interest under the dual-class share structure".The essence of the conflict of interest lies in the inconsistency of the demands,which originate from the differentiation of interests.This chapter mainly analyzes the different interests of each subject under dual-class share structure,expounds the formation and concrete manifestation of the conflict of interest,and analyzes the intricate interests and logical structure of its associated interaction in the dual-class share structure so that a suitable mechanism of interest balance will be carried out later.Chapter 4:"The anxiety in this institutional innovation:the legitimacy and rationality of the dual-class share structure".The main content of this chapter is to analyze the theoretical basis,institutional advantages and possible disadvantages of the dual-class share structure,and the relevant legislative provisions in China.This chapter attempts to show that despite the existence of a more intense conflict of interest under the dual-class share structure,the relation of the maintenance of the founder's control and the protection of the interests of the public investor,is not an irreconcilable contradiction.And the flexible equity structure which is conducive to the company to adapt to the rapid changes in the market.Chapter 5:"Setting the legal boundary:seeking a balance mechanism about risk burden and rights allocation".According to the idea of "restricting the strong side and leaning on the weak side",this chapter aims to design the suitability of the national conditions and the dual-class share structure so as to minimize the negative impact of the dual-class share structure.Only in this way,can we get its institutional advantages better and protect the double-tier ownership structure in China's operation smoother.