Research On Risk Prevention Of "Tunneling" Of Ultimate Shareholders Under Dual-ownership Structure

Dual-class structure means that a company issues two different kinds of shares to original shareholders and outside investors,such as a share and B share,which are equal but have different voting rights.Since entering the 21 st century,the Internet has gradually entered our daily life,has become an essential part of life.At the same time,China’s internet technology-based enterprises are developing rapidly.However,the success of these enterprises often depends on the irreplaceable personality charm and personal strength of the founders,compared with traditional enterprises,the role of the founder is even more important.What’s more,it’s not uncommon for a majority of public companies to fight for control,with founders powerless to resist an invasion of foreign capital and having to watch their own companies fall into the wrong hands.As a result,domestic internet technology companies such as jd.com and Alibaba have to list on overseas exchanges.In this way,although these outstanding Internet technology companies can avoid the invasion of foreign capital,but it must be under the supervision of the overseas market at all times,and at the same time it will pose a serious threat to the national interests and the security of the enterprise’s core technology.Under the equity structure of "the same shares and the same rights",the company needs to raise a lot of capital to develop,but this will lead to the dilution of the founder’s equity and make the company’s development into a contradiction.Therefore,the traditional structure of "the same shares and the same rights" can not meet the needs of the new era of corporate development.In April 2018,the listing rules for the composite main board of the Stock Exchange of Hong Kong,which allow dual-class companies to list in Hong Kong,came into force.In July of that year,Xiaomi became the first company on the Hong Kong stock market to go public with a dual-class structure.The dual-class structure uses two different types of shares,AB,to distinguish between equity and voting rights,to ensure that the founder still has absolute control over the company when raising funds.However,behind these advantages there are huge hidden dangers.The possibility of the founder shareholders’ infringement on the interests of minority shareholders increases with the application of dual-class ownership structure.This paper takes Xiaomi company as the Research Object and discusses the issue of "tunneling" of the ultimate shareholders under the dual ownership structure,starting from the motivation of Xiaomi company to adopt the dual ownership structure,using GONE theory to analyze the motivation of "tunnel digging" of Xiaomi’s ultimate shareholders,this paper discusses the risk of "tunnel digging" of Xiaomi’s ultimate shareholders from the perspective of corporate governance,including(1)the risk of misuse of resources;(2)risks arising from the occupation of resources;(3)risks arising from the inadequacy of the existing system.Finally,the paper puts forward the corresponding suggestions from the aspects of making the performance-based "sunset clause",making the effective "sunrise clause" and restricting the voting subjects with dual-class ownership structure.With a view to the adoption of dual-ownership structure of the enterprise sounded the alarm,do not only pay attention to its advantages,but ignore the potential danger.