Study On The Agency Problem Of Dual-Class Common Stock Structure And Its Solutions

The ownership structure is crucial to the operation and management of a company.In order to promote the high-quality development of innovation and entrepreneurship and meet the requirements of the new economic era,the use of dual-class structure has been introduced after the Hong Kong Stock Exchange.Scientific and creative enterprises can adopt different voting rights arrangement to be listed on the Science and Technology Innovation Board.The design of dual class share structure raises agency problem between controlling shareholders and common shareholders.The market mechanism and institutional environment can reduce or eliminate the negative impact of agency cost.Through the analysis of the existing mechanism,this paper finds that the mechanism is insufficient to fix the endogenous defects of the structure.The market could to a certain extent value dual-class share structure companies correctly.However,the investors is not mature enough,and the IPO pricing mechanism is insufficient.Therefore,the agency cost of dual-class structure cannot be solved only by relying on the market,and more importantly,the agency cost of dual-class share structure can be solved by regulatory rules.And deficiencies exist in current rules,including: overgeneral information disclosure,unreasonable controller shareholders qualification regulations,unreasonable scope of voting issues following "one share,one vote",failure of the supervisory role of the board of supervisors and independent directors,the lack of dealing with the controlled-minority shareholders breaking fiduciary obligations in "sunset clause",loopholes existing in rules of investor protection institutions,unfriendly rule of expense bearing for supporting shareholders to file a lawsuit.Therefore,in view of the existing rules to solve the problem of agency cost,this paper puts forward corresponding suggestions to improve the relevant rules,including clarifying the qualification and performance standards of special voting shares holders,adding a system of class shareholders meeting and broadening the repurchasing situation of dissenting shareholders' shares,adding rules about depriving the dishonest shareholders with special voting rights,increasing requirements about the forms of information disclosure on differential voting rights arrangement and risk prompt,giving more supervision rights to the board of supervisors and independent directors,concretizing the relevant rules of investor protection institutions in representative litigation and improving the rules of the costs of shareholder litigation.