Research On The Difference In Voting Rights

As China's economy has shifted from high speed growth to high-quality development at present.It is necessary to promote high-quality development of the economy with high-level openness.The principle of market-orientation,rule of law and internationalization shall be followed in the optimization of business environment.The State promotes standardized and healthy development of multi-tiered capital markets,widens financing channels for market players,and supports the issuance of stocks in accordance with the law and the expansion of the scale of direct financing by eligible private enterprises and small and medium-sized enterprises.Adhere to the principle of one share one vote,founders often face a dilemma when considering whether to issue shares to aise funds or to give up efficient financing to maintain control.Founders do not have the same business philosophy as the investors.If this dilemma cannot be solved,founders would rather not issue shares.One possible solution to such a dilemma would be to allow companies to issue shares with differentiated way of equity allocation.This paper takes the Difference in voting rights as the research object.Difference in voting rights: means that the issuer issues shares with special voting rights in addition to the ordinary shares generally stipulated in accordance with the provisions of Article 131 of the Company Law of the People's Republic of China.Each share with special voting rights has more voting rights than each ordinary share,and its other shareholders' rights are the same as those of ordinary shares.STAR Market allows a listed company to set Difference in voting rights.The listed company may,due to such arrangements,fall under the circumstances such as the rights of control are relatively concentrated or the quantity of voting rights possessed by each share with special voting rights is bigger than that of voting rights possessed by each ordinary share,making the voting rights of ordinary investors and their influence the routine operation and other affairs of the Company being restricted.NEEQ also allows it.This paper consists of four parts.The first part is the principle of Difference in voting rights.Mainly from the basic connotation,essential attribute,theoretical basis,and extraterritorial system toexplain.Although the Difference in voting rights breaks through the principle of one share one vote,it does not deviate from the principle of same share same rote.The importance of human capital,the principle of efficiency,the theory of corporate autonomy,the theory of shareholder heterogeneity and the principle of shareholder equality all provide logical support for the Difference in voting rights.The principle of one share one vote is not the only way of equity allocation in both common law countries and civil law countries.The second part is the Analysis of the legal transplantation,mainly analyzes the necessity and potential risks of the introduction of Difference in voting rights.The advantage of the Difference in voting rights lies in maintaining the founder's control right and protecting the company's development function.The necessity of legal transplantation in the region lies in the needs of local enterprises' development,innovation strategy and global competition in the capital market.Due to the natural characteristics of agency mechanism,the weakening of corporate governance mechanism and the loss of capital market supervision,the abuse of special voting rights will seriously infringe the rights of ordinary shareholders.At present,there are problems in the internal supervision mechanism of the company and the lack of shareholders' fiduciary duty,which is not conducive to the supervision and restriction of special voting rights.The third part is the analysis of the existing rules on the Difference in voting rights.Carding the existing rules and provisions.While affirming its positive significance,it should not neglect possible problems,such as incomplete legislation system,insufficient information disclosure.In addition,the writer analyzes the reasons for the differences between the rules of STAR Market and NEEQ.The fourth part is to give advice on improvement of the arrangement of the Difference in voting rights.The shortcomings of the previous article can be solved by the following ways.First,issue special administrative regulations and amend the company law.Second,improve existing rules.Such as improve the standards of information disclosure obligations.Thirdly,reform the internal supervision mechanism of the company.Fourth,strengthen the Fiduciary obligations of founder shareholders.