Research On The Protection Of Public Investors’ Rights And Interests Under The Dual-class Share Structure

With the economic globalization and the rapid development of the capital market,the dual-class share structure is gradually recognized and adopted by some countries.Under the policy of promoting the development of innovation economy in our country,the science and Technology Innovation Board also began to carry out the dual-class share structure.The purpose of the double-layer equity structure is to solve the contradiction between the financing demand of innovative enterprises and the dilution of founder’s control right,to help enterprises resist hostile takeover more effectively and to promote the long-term stable development of enterprises.However,the lock-in of control rights may also lead to some negative situations,the most controversial of which is due to the asymmetry between the voting rights and cash flow rights of controllers,and the excessive concentration of control rights may lead to the failure of internal and external monitoring mechanisms,increase the likelihood that the controlling owner will sacrifice the interests of the company and public investors for private gain.In order to reduce the loss caused by the defects of the dual-class equity structure,China has set up a series of legal restrictions on the system.Compared with China’s specific practice and combined with relevant experience outside the region,these measures taken by China have indeed played a role in rectifying the deviation to a certain extent,however,it also reveals that there is still great room for improvement in the new environment of China’s science and Technology Innovation Board.In order to better improve the arrangement of the two-tier shareholding structure system,and in combination with the current market environment of Science and Innovation Board and the diversified investment needs of public investors,this paper will summarize the protection measures for public investors:(1)setting strict “Sunrise Clause”and Sunset Clause for the companies that are going to be listed with dual-class equity structure.(2)to establish a sound information disclosure system to ensure that public investors have access to the contents and risks of their investment projects.(3)improve the relief mechanism after the event.This paper is divided into five chapters:Chapter one:This paper discusses the research background and significance of the article,summarizes the scholars’ research on the dual-class share structure,compares the dual-class share structure in different jurisdictions,and compares the problems and consummation ways under this structure.Chapter two:Theoretical analysis on the protection of public investors’ rights and interests under the dual-class share structure.This chapter mainly introduces the legal connotation and characteristics of the dual-class ownership structure,explains the need of introducing the dual-class ownership structure in China by citing cases,and analyzes the influence of the dual-class ownership structure on the public investors.This structure is in accordance with the public investors ’multiple investment preferences,helps the science and technology innovation board enterprises to resist hostile takeover,and escorts the company’s sustainable and stable development.However,the dual-class ownership structure has its own limitations.When the control power is too concentrated,it is easy to cause moral hazard.While resisting hostile takeover,it also weakens the constraints of the external M &a market,when the overall interest of the company deviates from the personal interest of the controller,the controller with high voting power is likely to take self-interest as the core,the content of this chapter is to analyze the damage and cause of formation of this structure to the public investor’s rights and interests.Chapter three:On the protection and insufficiency of investors under the dual-class share structure in China.In order to balance the impairment of the dual-class shareholding structure on the rights of external investors,China has arranged a series of balancing measures in the system design,the deficiencies of the structure in the system design are summarized.Chapter four:An extraterritorial approach to the protection of the interests of public investors under a two-tier shareholding structure,compared with the relevant two-tier shareholding structure in the United States,Canada,Singapore and Hong Kong,China,in order to better China’s two-tier equity structure under the protection of the rights and interests of public investors to improve the proposal.Chapter five:Suggestions on the protection of public investors under the dual-class ownership structure.Based on the mature governance measures of double-layer equity structure in foreign countries and the specific conditions of our country,such as the investment environment and the current situation of public investors’ ability,strict supervision measures should be carried out.First of all,the strict screening criteria for listing,to be prepared to adopt a two-tier equity structure of listed companies to implement a strict access system.Secondly,according to the types of investors,setting different ways of information disclosure can better meet the needs of investors,and finally,building a more perfect ex-post relief mechanism,including improving the “Sunset Clause”situation.