Research On The Legal Structure Of Dual-class Share Structure

On January 30,2019,China Securities Regulatory Commission issued "Implementation Opinions on Establishing a Science and Technology Innovation Board and Pilot Registration System on the Shanghai Stock Exchange".On March 1,the listing rules and supporting rules of SSE Star Market officially put into effect,allowing companies with dual-class share structure to directly list on SSE Star Market.On January 20,2020,Ucloud,the first dual equity company in SSE Star Market,was listed successfully,which means that the introduction of dual-class share structure in China's capital market has taken the first step.However,in the future,fully implementing dual-class share structure and constructing legal system in China still face opportunity and challenge,which need to be tested and improved in practice.Refer to laws and regulations of foreign countries and regions,combining with the Listing Rules of China's SSE Star Market and the listing regulations of Ucloud company,and from China's actual situation,the legal system of dual-class share structure suitable for China is constructed.Through the evaluation and analysis of various theories of dual-class share structure,the dual-class share structure will protect the company to obtain external financing and the founder and its team to control the company,while damage the rights and interests of investors,produce higher agency costs and fail corporate supervision mechanism.The theoretical analysis should be combined to seek profits while avoid harms and give full play to its advantages.In order to protect the legitimate rights and interests of investors,this paper analyzes the conditions of the dual-class share structure,and considers that the applicable industry scope can be limited to a certain extent,and then the restrictions can be cancelled as appropriate;the rules of the qualification of the holders of special voting shares should be insisted in the future legislative provisions;it is feasible and reasonable to allow companies to adopt the dual-class share structure in IPO.In order to solve the problem of the legislative norms of the basic structure of the dual-class share structure when it is applied in the main stock market of China in the future,this paper puts forward specific suggestions on the construction of the legal rules of special voting shares: the scope of application of special voting rights should add the legal reservation of bankruptcy and delisting;the number and proportion of special voting shares stipulate that the proportion of ordinary voting shares should be set at 10-50% more strictly;The "sunset clause" with fixed term should not be added to the conversion of special voting shares to ordinary voting shares;for the transfer of special voting shares,the exclusion clause should be set on the basis of limiting the transfer of special voting shares.The implementation of China's dual-class share structure system still lags behind the market changes and demands,so the supporting mechanisms and measures should be further improved.Based on the idea of balancing the interests of company control and supervision.It is proposed to standardize the fiduciary duty of the controlling shareholders,ensure that the control right of the company is not abused,and ensure the sustainable and stable development of the company,set up the system of independent directors to strengthen the supervision of the shareholders with special voting rights,and force the company to make self-binding commitment to regulate the operation and management of the company with dual-class share structure.