Two-tier Equity Structure, Social Capital And Actual Control Rights

In recent years,while many listed companies are expanding the scale of the company and absorbing external capital,the controls of the founding shareholders are also faced with the risk of being diluted.As if The struggles for controls of New Harbour,Greentown,Shanghai Jahwa,NVC Lighting and other listed companies had happened yesterday.While during the half of 2015 “The struggle for control of Wanke”led to more and more scholars discuss about same-shared-equity shareholding system based on China capital market.At the same time,in order to safeguard the actual control rights,China has emerged an upsurge in the collective IPO of Chinese conceptual stocks.On the one hand the “same-shared-equity” shareholding system has deprived China’s capital market of a large amount of potentially high-quality listed company resources.On the other hand,the “same-shared-equity-rights” shareholding system will cause highly-separated listed companies to become hostile to social capital when they invade.The loss of ownership structure governance barriers has led to the founder’s actual control being weakened or even driven out of the company’s dire situation.The emergence of a double-level equity structure can fundamentally solve the problem of the share-right-equity rights system that will be affected by social capital.The fact that Alibaba was accompanied by the introduction of social capital under the same-share right-of-share system was an eight-year struggle for corporate control with Yahoo.After going through the scramble for control to hinder the long-term development of the company,Alibaba successfully adopted the double-tier equity structure in September 2014 to conduct an IPO at the NYSE.Alibaba adopted a two-tiered shareholding structure to achieve the transformation of its corporate governance structure.It used the partner system to control Alibaba;s actual control rights in the hands of a partner team represented by Ma Yun.The two-tiered shareholding structure can better solve the problem that the company’s founder loses actual control because of the large number of social capital entering the company during the process of capital increase and share expansion under the same-share right-equity system,which can effectively contain the hostile takeover of social capital and guarantee the creation of The corporate standards and corporate culture established by the team can be inherited and developed so that the company can continue to grow and develop in accordance with the established blueprint.Based on the case study of Alibaba,this paper explores the impact of social capital on the actual control rights based on case study and comparative analysis.Further refinement of transition economies listed companies to achieve demand and double ownership structure,and the system level can be improved and optimized,provides a useful theoretical reference for the practice of double ownership structure transition economies,but also provide decision-making reference for the relevant government departments.