Research On Protection Of Minority Shareholders In Dual-Class Share Structure

Based on the theory of shareholder heterogeneity,contractualism and substantial equality of shareholders,dual-class share structure can simultaneously realize the dual functions of introducing external funds and maintaining corporate control,so it is favored by some technology companies and banks.However,minority shareholders are in a more dangerous situation due to the limited or no voting rights of the shares,the failure of internal and external supervision mechanism,and the abuse of control by controlling shareholders.How to reduce the negative impact of dual-class share structure and safeguard the minority shareholders has become an important topic.At present,China has introduced two systems in the attempt of dual-class share structure:the preferred share system and the differential voting arrangement.Based on this background,this paper discusses the topic of protecting the minority shareholders,hoping to provide some contribution for the operation of dual-class share structure.Based on the theories of dual-class share structure and the protection of minority shareholders,this paper examines the current situation of dual-class share structure,summarizes the shortcomings of the current preferred share system and the differential voting arrangement.The shortcomings of the current situation are mainly manifested in the fact that some rights of minority shareholders are strictly restricted.In addition,the lack of fiduciary duty of controlling shareholders and the problem of special representative litigation system are also prominent.In dual-class share structure,the interests of controlling shareholders and minority shareholders are in serious conflict,and the abuse of control by controlling shareholders further puts minority shareholders in a disadvantageous position,the deep-seated reason behind this series of problems lies in the inadequate weighing of interests about the system design.Therefore,the framework of protecting of minority shareholders in dual-class share structure should be revised and improved by means of a balance-of-interest approach,and the general requirements include protecting substantive rights,limiting rights and improving postevent remedies.Taking into account the above general requirements and the shortcomings of the current situation,specific improvement are proposed for the preferred share system,the differential arrangement of voting rights,the fiduciary duty of the controlling shareholder and the special representative litigation system,so that the minority shareholders can be treated fairly and the interests of all parties under the dual-class share structure can be dynamically balanced.