The Perfection Path Of Class Share System In China

The formal "naming" of class shares in the 2021 "Company Law of the People’s Republic of China(First Review of the Revised Draft)"(hereinafter referred to as "Company Law Draft I")marks that the dispute over class shares has no longer focused on its legitimacy and rationality,and the path to the improvement of the class share system has been put on the new agenda of corporate governance in China.Due to the immaturity of China’s capital market,issues such as abuse of voting rights,equity structure design,and insufficient internal and external supervision during the introduction of the class share system restrict its subsequent development.To address these issues,it is necessary to explore a set of applicable mechanisms for class shares with Chinese characteristics based on China’s practice and foreign experience to improve the class share system.This paper uses the methods of literature research,comparative analysis,case analysis and other research methods to study the improvement path of China’s class share system.The full text is divided into the following five parts.The first part discusses the development process and positive practice of China’s class stock system.This chapter provides a general description of the development of the class stock system in China.Taking the listing rules of the Stock Exchange of Hong Kong and the Shanghai Stock Exchange as examples,it analyzes their access regulations for the listing of class stock companies,which is a useful exploration for class stocks in China.The second part evaluates and analyzes the rules of class shares in the "Draft Company Law II"."The provisions on class shares in the Second Draft of the Company Law are based on principles,and the system design is not specific enough.Measures to improve the interests of small and medium-sized shareholders,optimize the equity structure,and improve internal and external supervision need to be detailed."The third part explores how to protect the interests of small and medium-sized shareholders.Use appropriate references to time based sunsets and ownership percentage sunsets to limit voting abuse.Provide substantive and procedural relief to minority shareholders from three aspects: the preconditions for the revival of voting rights,the voting mechanism of class shares after the revival of voting rights,and the exercise of rights.Defensive clauses in the articles of association use the flexibility of the articles of association to avoid the "one size fits all" stipulated by the law.The right to dissent from repurchase requests is the best option for small and medium-sized shareholders to safely exit the company.The fourth part analyzes how to optimize the ownership structure.A permanent class share structure is not desirable in the long-term operation of the company,and the equity structure of class share companies should be adjusted in a timely manner.Complete the transformation of the class stock system by taking the time based sunset and performance based sunset as the trigger points and combining the company value;Evaluate the ability and vision of management based on event triggered sunsets and independent directors as reference factors to determine whether equity is optimal;Finally,introduce the power of intermediary service institutions and the government to provide development templates for other enterprises’ equity structure selection through social evaluation and administrative guidance.The fifth part explores how to improve internal and external regulatory measures.The company’s internal supervision uses independent directors and coattail clauses as a breakthrough point,while external supervision relies on the refinement of mandatory information disclosure methods and the full play of the review role of stock exchanges to create a good business atmosphere for category companies as a whole.