The Application Of Dual-Class Share Structure In XIAOMI Corporation

Dual-Class share structure is different from the traditional single share structure,the shares of the company are classified into high-voting share and low-voting share.Under this arrangement,the high-voting shareholders can maintain their control over the company even if their stock share is insufficient.Although dual-class share violates the principle of equity equality,it resolves the contradiction between equity financing needs and the maintenance of founder control rights,it satisfied the diversified needs of corporate governance.A lot of excellent technology companies in China use dual-class share structure,such as Alibaba,Tencent and JD,etc.However,due to the imperfect development of China's capital market,dual-class share structure is not fully accepted,those excellent companies cannot be listed in China and the investment income is earned by foreign investors.In this situation,the capital market of our country will be marginalized,we will lose development opportunity.On April 30,2018,HKEX released the revised main board listing rules,allowing companies listed with dual-class share structure.XIAOMI became the first company to be listed in Hong Kong with dual-class share structure.This paper selects XIAOMI corporation as an examples,After studying the basis of equity structure theory and related literature,it analyzes the necessity of using dual-class share structure in XIAOMI corporation in financing and operation;Through the horizontal comparison with similar companies,this paper analyzes the characteristics of dual-class share structure in XIAOMI corporation,in that structure the conversion and exit mechanism of high-voting share is more consummate,the proportion of voting rights is more reasonable,improving the effect of interior corporate governance;Through the analysis of control rights and operating conditions,this paper affirms the positive effect of applying dual-class share structure in XIAOMI corporation;This paper analyzes the risks caused by the separation of control rights and cash flow rights,it puts forward the essence of risk of dual-class share structure,it points out the risk of using dual-class share structure in XIAOMI corporation,that structure may generate risk in decision and related transaction,To guard against these risks,this paper puts forward some suggestions on strengthening information disclosure,establishing after-the-fact accountability system and strengthening the protection of minority shareholders.Through the analysis of the application of dual-class share structure in XIAOMI corporation,this paper provides some empirical evidence support for the diversified development of China's equity structure,which has certain practical significance.With the gradual lifting of restrictions on dual-class share structure in China,the outflow of excellent enterprises will be reduced,and the attractiveness of China's capital market will certainly be greatly enhanced.