Research On The Shareholders’ Interest Balance Mechanism Of The Differential Voting Rights Structure On The Star Market

In 2019,China’s STAR Market starts to apply the differentiated voting rights structure and allows the listing of special voting shares.This paper reviews the prospectuses of the companies applying for listing on the STAR Market through the stock audit system of the Shanghai Stock Exchange(hereinafter referred to as SSE),and finds that there are currently more than 500 companies applying for listing on the STAR Market,but very few companies apply the differentiated voting rights structure,and the differentiated voting rights system has failed to spread on the STAR Market.Therefore,this paper further identifies the problems by studying the design of the balance of shareholders’ interests system in China’s STAR Market.In comparison with the relevant mature systems in foreign countries,this paper further proposes suggestions to improve the balance mechanism of shareholders’ interests on China’s STAR Market,with a view to facilitating the healthy development of the differentiated voting rights system on China’s STAR Market.Firstly,we argue the necessity and urgency of improving the balance mechanism of shareholders’ interests from the perspective of the risks of abuse of special voting rights,deprivation of the voice of ordinary voting shareholders and the reality that this system is "left out".In addition,the principles of the balance of shareholders’ interests mechanism,including power control,protection of the right to information and remedy of rights,are used to lay the main line of the following research.This paper mainly focuses on the imbalance of interests between special voting shareholders and ordinary voting shareholders and within special voting rights.Then,we analyze the prospectuses of listed companies applying the differentiated voting rights structure on the STAR Market and the relevant laws and regulations in China,and introduce the design highlights of STAR Market listed companies regarding the setting up of "Concerted Action Agreement" to protect the unanimity of meaning of special voting shareholders and diversified voting methods.It also clarifies that the current differential voting rights system in China suffers from the lack of restraint of special voting rights,generalized information disclosure,increased risk of corporate deadlock,unspecific provisions on the content of prior compensation,and inadequate shareholder remedies,presenting the current situation of imbalance in the restraint mechanism of special voting rights,imbalance in the protection mechanism of shareholders’ right to information,and imbalance in the remedy mechanism of shareholders’ rights and interests.In addition,we analyze and introduce the protection system of shareholders’ interests in three legislative models of differentiated voting rights in foreign countries,among which the system in the United States is more mature,such as securities litigation,fiduciary duty of controlling shareholders,the "breakthrough clause" in Japan and the "swallowtail clause" in Canada.This paper provides some inspirations for the improvement of the balance mechanism of shareholders’ interests with different voting rights in China.Finally,this paper combines the issues raised in the above-mentioned chapters and overseas experiences,and follows the principles mentioned in Chapter 1 for the establishment of the balance of shareholders’ interests mechanism to improve it.That is,to improve the differential voting rights constraint mechanism: to strengthen the system of independent directors,to apply the double voting system in the election,to extend the "veto power" of independent directors,and to improve the remuneration method of independent directors.The special voting right is not applied to the election of supervisors,and a sunset clause is provided for a limited period of time to restrict the special voting right shareholders,and the fiduciary duty of controlling shareholders is introduced.To set up a mechanism to protect shareholders’ right to information,and to specify the disclosure of company information,focusing on whether the exercise of special voting rights in connected transactions is regulated.Improve the relief mechanism,broaden the circumstances of repurchase by dissenting shareholders and the right of valuation,improve the securities arbitration system and the early payment system,and include the issuer as the subject of the early payment,and suggest that the company’s articles of incorporation should be mandatory with a chapter on measures to resolve corporate deadlock.