Research On The Regulation Of Time-based Sunset Clasuse

The reason of the regulation of the time-based sunset clause lies in the multiple drawbacks of the dual-class capital structure.In the dual-class equity structure,the voting rights of special voting shareholders are greater than those of ordinary shareholders.The cost of obtaining control rights is too low,which leads to the abuse of control rights by special voting shareholders.With the weakening of the shareholder’s special vision,the dual-class equity structure will develop to a stage where the cost is more than the income,which will evolve into an ineffective structure.The mechanism of the dual-class equity structure determines that it has the tendency to resist termination and conversion,and lacks the external forced conversion mechanism,which is difficult to solve the problem of the inefficiency of the dual-class equity structure.As the most efficient tool to dismantle the dual-class equity structure,the regulation of the time-based sunset clause is reasonable and necessary.Statutory mandatory school and free market school are two regulatory ideas of time-based sunset clauses.Statutory mandatory school thought that it is necessary to stipulate the time-based sunset clause by law to ensure that the negative the dual-class equity structure will be eliminated.According to free market school,the applicability of the time-based sunset clause should be based on the free choice of the market.The former has the problem of excessive intervention,while the latter has the danger of disorder of private order.Legal soft paternalism embodies the compromise between liberalism and compulsion,which core feature is to reserve the freedom of choice for the subject under moderate intervention.The regulation of the time-based sunset clause should follow the legal soft paternalism to alleviate the excessive intervention of the regulatory authority and make up for the limited rationality of the market subject.The regulation of the time-based sunset clause should maintain the dynamic balance between the right of income and the right of control,choose the compromise path of autonomy and intervention,take "soft law" as the main carrier,and take the default rule as the main type of regulation.The mode of "comply or explain" is the embodiment of legal soft paternalism.When a provision adopts the mode of "comply or explain",the company should comply with this provision in general principle.If it refuses to comply with this provision,it is necessary to explain the situation and reasons for non-compliance.The regulation of the time-based sunset clause should adopt the mode of "comply or explain".The exchange should incorporate the time-based sunset clause into the listing rules,which will be regulated by the self-regulatory rules of the exchange.In principle,the issuer should accept the sunset clause.The self-regulatory rules should give the issuer the right to exclude the application of time-based sunset clauses.The "exclusion application" proposal of the issuer shall be approved by the shareholders’ meeting and the reasons for the exclusion application shall be explained and disclosed to the exchange.The exchange can use the form of inquiry letter to inquire and supervise the exclusion of applicable situations,improve the pertinence and effectiveness of information disclosure,and promote the interaction between information disclosure and market feedback.In the regulation of time-based sunset clauses,the most core element is the determination and change of the duration of time-based sunset clauses.When determining the term length of the time-based sunset clause,the theoretical tools of life cycle theory and the technical tools of computational law should be used to transform the fuzzy legal issues into calculable and measurable data issues,and obtain a reasonable term length.On the basis of the fixed term,a flexible system should be set up to extend or shorten the length of the time-based sunset clause,giving the market subject certain autonomy space,so that the time-based sunset clause can not only play a decisive role in ending the ineffectiveness of the dual-class equity structure but also establish a regular review mechanism for the dual-class equity structure.The regulation of time-based sunset clauses needs to build a systematic regulatory mechanism.The power of self-regulation of the exchange reflects the essence of social power.In the case that administrative and judicial means are difficult to play a direct and effective role,the "soft law" effect of the self-regulatory regulation rules of the exchange should be further exerted.a stepped self-regulatory punishment system of the exchange should be established to make up for the vacuum in the regulation by virtue of the autonomous,flexible and professional characteristics of the exchange.The disciplinary power of the exchange does not exist in isolation,but is in a large system in which self-discipline and supervision power,administrative power and judicial power interact with each other.The exchange and the CSRC should form a relatively clear,dynamic and adjustable mechanism,which together constitute an organic unity to regulate securities violations.The court should maintain the normal order,fairness and justice of the capital market through judicial means,and should also follow the judicial policy of "limited intervention" to ensure the operation of the self-regulation power of the exchange.