Research On Legal Issues Of Dual-Class Structures

As China has begun to enter the new economic era with the trend of knowledge economy,the innovation drive has become a new power source for the development of the country's economy and society and the company.This is reflected not only in the entrepreneurs' need to maintain control,but also in the exchange's international competitiveness.Due to our country "company law" established a right to a principle,before the science and technology innovation board is not allowed to dual-class structure,practice more pyramid structure,the cross shareholding,consistent action protocol,such as voting delegate mechanism,to ensure that the enterprise control of entrepreneurs in the process of equity financing is not too much diluted,but these alternative arrangements compared with double ownership structure are respectively with corresponding disadvantage.In comparison,no matter which kind of control enhancement mechanism is adopted,it is not as transparent as the dual-class share structure.The cost of information disclosure is higher,and the actual controller's behavior of tunneling the listed company becomes more covert.Correspondingly,dual-class share structure has comparative advantages such as stability and openness.In the support theory of dual-class share structure,whether from the perspective of long-term value creation theory,entrepreneurial trait vision theory or exclusive human capital theory,it is more able to meet the demand of maintaining the control right of enterprises.However,this structure also has potential risks such as increasing agency cost and permanent control of company insiders,which need to be supplemented by corresponding arrangements when designing the system.According to the differentiated voting mechanism rules of China's science and technology innovation board,the specific negative impact reduction approaches include issuing requirements,issuing stages,beneficiary qualification restrictions,restrictions on high-voting shares,automatic conversion clauses and enhanced information disclosure.