Research On The Internal Interest Balance Mechanism Of The Company's Two-tier Shareholding Structure

Dual-class share structure,is a special shareholding structure that is different from the structure of one share-one vote.It could allow the founder to retain control over its company when the company is obtaining financing from external capital.Dual-class share structure had a long history abroad,but did not prescribe in the current domestic corporate law.With the rise of emerging industry,companies like Baidu,Alibaba,Sina and Xiaomi went public on the overseas capital markets,which these China-based companies adopted the dual-class share structure as what Facebook and Google did.When it comes to the introduction of dual-class structure in China,there were some supporters in academia.Meanwhile,these following changes of listed institution could draw the attention of the domestic academia and the public:In April 2018,the Stock Exchange of Hong Kong revised its listed institution to allow the corporations of dual-class share structure to go public;Besides,in January 2019,the Shanghai Stock Exchange released a legislation that could allow the companies of special share structure to go public in Sci-Tech Innovation Board.Comparing to the equal shareholder-right,people are concerned about the issues that whether this share system has some defects,and it is suitable for being introduced to capital market of China.There existed different voting rights in the stocks of dual-class share structure,which caused the situation of weighted voting rights.This situation aggregated the conflicts of interest between different stakeholders.The conflicts between stakeholders in dual-class share structure are:conflicts between shareholders with multiple voting right stocks and other shareholders,conflicts between shareholders and the corporation,conflicts between shareholders and the management,conflicts between shareholders and the employers,as well as conflicts between shareholders and the creditors.The above-mentioned conflicts constitute the inherent conflicts of interest and the traditional conflicts of interest in corporate system.There conflicts are problems we have to face when introducing dual-class share structure.This thesis is aimed at providing legal advice for introducing dual-class share structure,which is constructing mechanism of balancing inherent conflicts of interest in the structure,by means of writing in the perspective of inherent conflict of interest in the structure,and basing on the introduction of dual-class share structure in different countries,to analyze the conflicts of interest between stakeholders.This thesis mainly includes:Chapter One is about the introduction of dual-class share structure,and there are two sections in all.The first section is the about the definition and types of dual-class share structure;The second section is analyzing the possibility of introducing dual-class share structure in China from the perspective of environment of domestic investing and protection of invertors.And the third section illustrates by examples of Lakeside Partners of Alibaba.This Chapter begins with the basic definition of dual-class share structure,to lay the foundation for further study in the following chapters.Chapter Two is presenting the dual-class share structure in foreign countries,and comparing them with the legislation in China,to emphasize the necessity of introducing dual-class share structure in China.The first section is about the legislation of dual-class share structure in foreign countries,which includes the legislation in United States,Germany and United Kingdom.;The second section is about the legal status of the structure in China,which demonstrates from views of the current legislation,the legislation trend and the necessity of introducing this structure in China.Chapter Three is analyzing the inherent conflicts of interest in dual-class share structure,from the perspective of stakeholders,to disclose the conflicts of interest between:conflicts between shareholders with different voting-right stocks,conflicts between shareholders and corporation,conflicts between shareholders and management,conflicts between shareholders and employers,conflicts between shareholders and the creditors.By analyzing the inherent conflicts of interest,it can disclose the disadvantages of dual-class share structure,which leads to the construction of mechanism of balancing the inherent conflicts of interest in the following chapter.Chapter Four proposes the balancing mechanism of the inherent conflicts of interest under dual-class share structure,which contains five suggestions:limiting the high voting right,improving the mandatory information disclosure system,improving the voting mechanism in corporation,introducing the system of stockholder class action lawsuit and strengthening the independent director system construction.By constructing this mechanism,it can provide suggestions for the introduction of dual-class share structure and make the best of the advantages of dual-class share structure.