Research On Investor Protection System Under Differentiated Voting Structure

The differentiated voting structure meets the market demand and solves the contradiction between the financing needs of innovation-oriented enterprises and the dilution of the controller's equity.The entrepreneurs' lock on the control can effectively resist the hostile takeover,so as to maintain the stable control,which is conducive to the stable and long-term development strategy of the enterprise.However,the lock of control will also cause "side effects" : the controller's right to vote is not proportional to the cash flow right,the strengthening effect of control and the weakening of the external m&a market constraints facilitate the controller's abuse of control,and increase the risk of the controller to sacrifice the interests of investors and gain "PBC".To weaken the "side effects",balance the interests of investors,when the system is introduced into our country stipulated a series of legal restrictions,kechuang plate in the first implement the structure of the listed companies in order to attract investorsalso increased outside investors special protection measures,voluntary contrast from outside experience and practice in our country,these measures are indeed had rectifying effect,but also exposes the structure kechuang board in our country under the new environment.In order to better improve the arrangement of special voting rights,combining with the current market environment of science and innovation board and investor demand,it is suggested that strict supervision measures should be applied to protect investors from the institutional level.In the medium term,in order to satisfy different investors' right to know,a differentiated information disclosure system should be established for different subjects.In the later stage,the innovative design of "sunset clause" was carried out according to the results of previous research.This paper is divided into four chapters:Chapter one: the development status and realistic demand of differential voting structure.This chapter mainly introduces the conceptual characteristics of the differential voting structure,focuses on the practical needs of the structure,shows the reasons for the popularity of the structure,and introduces the development process of the system in the United States with early experience and Hong Kong with full reference to China's science and innovation board,in order to better explore the advantages and disadvantages of the structure.Chapter two: the derogation of the differentiated voting structureto the rights of external investors.The structure arrangement of differential voting right can only be called the second-best choice to ensure the stability of control right of innovation-oriented enterprises.The lock of control effectively resists external hostile takeover,but weakens the constraint of merger and acquisition market.When the overall interests of the company are deviated from the controller's private interests,the controller with super right of speech has a strong incentive to distort the decision.This chapter analyzes the weakening of investors' rights by this structure and the causes.Chapter three: Analysis of the relief balance mechanism of differential voting structure.In order to balance the derogation of the differentiated voting structure to the rights of external investors,each country will arrange a series of balancing measures in the system design.This chapter summarizes the deficiencies of the structure in the system design and the remedy mismatches in the environment of China's science and innovation board through the comparison of the rule making within and outside the domain and the listing practice of China's first differentiated voting structure company.Chapter four: Suggestions on investor protection in differential voting structure.Different from the mature corporate charter and supporting relief system in the United States,China's investment environment and investors' ability require strict regulatory measures.Strict supervision measures first need strict screening criteria of listed companies that is toimprove the applicable conditions of the structure;Secondly,the differentiated information disclosure system based on the different implementation of investors' abilities is adopted to better meet the realistic needs of investors' right to know.Finally,there is the addition of special voting invalidation,known as the "sunset clause".All three measures are the institutional tilt offered to outside investors,which enables the structure to better balance its advantages and disadvantages.