On The Perfection Of Dual-class Share Structure In China

The tide of scientific and technological reform has swept the world,and scientific and technological innovative companies have risen rapidly.The dual-class share structure is favored by scientific and technological innovative companies because it meets the practical needs of maintaining the founder’s control and listing financing,prompting many countries and regions to gradually liberalize the restrictions on dual-class share structure.The issuance of the Listing Rules of the Science and Technology Innovation Board in 2019 marks the formal practice of dual-class share structure in China.However,the dual-class share structure not only strengthens the control right,but also increases the risk that special voting shareholders infringe on the interests of ordinary voting shareholders.Therefore,the dual-class share structure needs to be built around preventing the above risks.At present,the construction of the dual-class share structure in China is still in its infancy,and the existing legal regulations and supporting systems are difficult to effectively prevent the risks that brought by the dual-class share structure.This paper aims to point out the specific problems existing through the analysis of the current situation of China’s dual-class share structure,and put forward some suggestions to improve China’s dual-class share structure on the basis of learning from the institutional experience of other countries and regions.Firstly,through the analysis of the contents of dual-class share structure in the Listing Rules of Science and Technology Innovation Board,it is found that China’s regulations on the dual-class share structure mainly focus on ex-ante governance,and there are still many deficiencies in the regulations on in-process and ex-post governance.The defects are mainly reflected in four aspects: incomplete sunset clauses,invalid internal and external supervision mechanisms,insufficient targeted information disclosure,and imperfect relief system for ordinary voting shareholders.Secondly,through sorting out and summarizing the listing rules and institutional experience of the dual-class share structure in the United States,Singapore and Hong Kong region,it is proposed that China can learn from the institutional experience of foreign countries(regions) such as sunset clauses,information disclosure and securities class actions.Finally,In order to improve China’s dual-class share structure,it is suggested that China should strengthen the in-process governance of the dual-class share structure from three aspects: time-based sunset clauses,internal and external supervision mechanisms,and targeted information disclosure.Improve the ex-post governance from the aspect of the relief system for ordinary voting shareholders.