Research On The Shareholder Benefit Protection Mechanism Under The Special Control Arrangement

The design of shareholding structure and the arrangement of control rights are one of the core issues in modern corporate governance,which play an important role in balancing control rights and shareholders' interests besides improving corporate governance efficiency.So far,the listed companies in China have been using the shareholding structure and the arrangement of control rights in accordance with the principle of the same shareholding rights as stipulated in the "Company Law",implementing a one-vote voting system and being controlled by the shareholders with the highest shareholding ratio.However,in recent years,high-quality private enterprises in China's Internet industry,represented by Alibaba,Jingdong and Baidu,having adopted partnership system and dual-class share structure as their special arrangements of control rights.And these enterprises successfully listed on the US capital market.Previous research and practice have shown that the dual-class share structure and partner system characterized by “the same rights and different rights” have the advantage which traditional equity structure do not have in solving the dilemma of maintaining the control of the founder team and financing through the capital market.In addition,such special arrangements of control rights also play an active role in preventing the founders and major shareholders from competing for control and resisting hostile takeoversHowever,when used in this way,the risks under this special arrangement of control rights can not be ignored.In particular,the founder team as a operating shareholder may use their control rights to seek private benefits regardless of the interests of other shareholders.On the basis of reading a large number of relevant literatures,this peper combines the principal-agent theory,private income theory of control rights and theory of psychological ownership.This paper selects Alibaba Group which used partner system as a case company to analyze whether there are relevant incentives,restraint mechanisms inside and outside the enterprise and their mechanism of action,which are beneficial for realizing the protection of shareholders' interests under the condition that the partners team controls enterprise management and decision-making.The study found that: thanks to the ability of the partner team as the operational and strategic decision-makers and the effect of various incentives and restraint mechanisms,the members of partners team who are both management and operating shareholders can be effectively urged to exercise control rights cautiously and give full play to their advantages in all aspects.This will be helpful to improve the efficiency of corporate governance and management under the partnership system and then promote the performance in the market besides financial performance and strategic layout etc.of Alibaba Group to be better.The value and long-term development potential of company will be greatly improved,thus achieving the protection of the discrepant interests of different types of shareholders.Based on the conclusions of case analysis and the current situation of listed companies,securities markets and institutions in China,this paper concludes with the implications of relevant experience of Alibaba's partner system,hoping to have referential significance to a certain extent in promoting the governance model innovation of Chinese listed companies and the prosperous development of capital markets and the national economy.