The Legal Preventive Mechanism Of The Dual-class Share Structure

The dual share class breaks through the limitation of the traditional system,which is based on the theory that each share has different voting rights.In practice,the company tends to issue two different types of shares,the share held by the company’s founder or senior management has high voting rights.Other shareholders hold another type of shares with a little amount of voting rights.The aim of dual share structure is maintaining the controlling rights over the company of the founder or management.The STAR Market is a testing ground for the dual share class in the current capital market.From the provisions about this structure,we can see that the dual share class can help to balance and the long-term development of the company and the return of share investment.In recent years,Internet technology companies such as Baidu,JD and Alibaba have successively gone public overseas,which has attracted domestic attention to related topics such as dual equity structure,differentiated equity allocation,and class stocks.Due to the dual share structure,the special voting shares with voting rights are often far more than other ordinary shares,so hold the shares shareholders usually can be easily obtained for control of the company.There is a huge risk under the dual share class which is the abuse of shareholder’s rights including the abuse of controlling shareholders’ control rights and voting rights.Therefore,under the institutional arrangement of the dual-shareholding structure on the Science and Technology Innovation Board,it is a topic worthy of research to understand the risk of abuse of control and voting rights,and then to explore how to construct a perfect path for the prevention of abuse under the dual-shareholding structure.The abuse prevention mechanism under dual-class share structure is essentially a check and balance on the serious imbalance of voting rights within the company,which plays its role mainly through two ways: one is pre-prevention,the other is post-relief.Prevention methods of diversity,including information disclosure,qualified special voting rights to exercise the premise and the applicable scope,qualified special voting rights transfer circulation,qualified special voting rights supreme difference multiples,binding special shareholder voting rights and the interests of the company and ensure that voting common stock proportion limit,in view of the special voting rights issue a special supervision and advice,etc.On the one hand,it can be solved through judicial means;on the other hand,it can take disputes related to special voting rights.Both of them jointly escort the dual-class share structure and provide firm judicial guarantee.To be specific,it mainly includes making relevant laws and regulations to restrict the special voting right,refining the principle provisions in the judicial interpretation so as to implement them to the operational level,and establishing a perfect accountability and punishment mechanism to deter the shareholders who abuse the special voting right.