The Legislative Space And Practical Value Of Dual Shareholding Structure In Mainland

The dual shareholding structure is an unconventional shareholding structure compared to the single equity structure,which has not yet been introduced into China’s laws.Along with the "shareholder homogeneity" as the theoretical basis,the "one share-one vote" structure is gradually opposed to the "shareholder heterogeneity" phenomenon in practical development,the dual shareholding structure emerged at the historic moment.The dual shareholding structure originated in the United States in the 1980 s,and after ups and downs in the United States for nearly a century,it has now become one of the important means for Stock Exchanges in the United States to attract companies of high quality.In the past decade or so,high-tech industry companies represented by the Internet,medical care,and education in mainland have also chosen to go public in the United States in order to adopt the dual shareholding structure.Many of them are high-quality companies such as Baidu,Jingdong,and Alibaba.Examining the application of the dual shareholding structure in the United States,it can be found that the reason why the dual shareholding structure can be developed in the United States is.On the one hand,because the structure of the investor in the United States is dominated by professional institutional investors.And on the other hand,the United States has a relatively complete Supporting measures of the dual shareholding structure and the protection of a more complete legal system.For example,in terms of Mandatory Information Disclosure,it not only requires a wider range in laws,but also demands more detailed information on specific disclosures;It is affirmed at the legal level,and concessions are also given in shareholder litigation costs.Because the refusal of Alibaba to adopt the dual shareholding structure for listing in Hong Kong,Hong Kong officially allowed listed companies in Hong Kong to adopt the dual shareholding structure in 2018.In the same year,Xiaomi became the first company listed in Hong Kong with the dual shareholding structure.By taking Xiaomi’s successful listing in Hong Kong as the entry point,and exploring why Hong Kong can become China’s first province that allows the dual shareholding structure,it can be found that,as a province with a more developed domestic securities capital market,Hong Kong has an investor composition Compared with the mainland,the number of professional institutional investors is higher than that of the mainland.In addition,there is a relatively complete legal system to protect Mandatory Information Disclosure,but the degree of detail is slightly inferior to that of the United States.In terms of the judicial system,it is basically the same as that in mainland,and there are no specific laws to support shareholders in securities class actions.It can be seen from the application of the dual shareholding structure in the United States and Hong Kong that there is a certain rationality for the development of the dual shareholding structure in the two places.For example,for the outside of the company,the dual shareholding structure distinguishes restricted voting shares from super voting shares,so as to remain the company’s control in the hands of the founder’s team,which can effectively reduce the risk of hostile acquisitions outside the company.It is also a way to inheritance of the corporate culture.For the inside of the company,it can not only save the company’s internal decision-making and transaction costs,but also serve as an equity-based incentives for making innovation method to share the company’s achievements with the company’s core employees while ensuring that it does not threaten the status of the founder’s team.The needs of different investors in the context of "shareholder heterogeneity" can also be met by adopting the dual shareholding structure.However,the dual shareholding structure also has its own institutional disadvantage.For example,the dual shareholding structure not only violates the principles of equality and democracy of modern company law,but also increases the agency costs of the company and increases the damage of shareholders with super voting rights to the interests of ordinary shareholders.For China,with the introduction of the Shanghai Stock Exchange’s "Shanghai Stock Exchange Science and Technology Innovation Board Stock Listing Rules" in 2019 and the successful listing of Shanghai U-Tech Technology Co.,Ltd.’s the dual shareholding structure in China,China’s practice and legislative exploration of the dual shareholding structure have begun.The introduction of the dual shareholding structure will not only help China improve its competitiveness in the international capital market,retain domestic high-quality enterprises,and attract high-quality overseas enterprises,but also respond to and promote the new changes in China’s securities market and the practice of the Shanghai Stock Exchange.In China,we can use the examples of the United States,Hong Kong,and Shanghai to sum up experiences,make strengths and avoid weaknesses,and build a localized the dual shareholding structure.