Investor Interest Protection Under Dual Class Share Structure ——MI As Case Study

Dual-class shares have become one of the most controversial issues in today's capital markets and corporate governance debates.In first half of year 2019,the science and technology innovation board released restriction of dual-class shares structure for Chinese enterprises in March,offering opportunities for such company and allowing the listing of special voting shares before starting their IPO process.This practice is in compliance with shareholders' heterogeneity,and create a new path to narrow the gap between enter price financing and control rights dilution.By locking down control rights,founder can effectively defeat hostile acquisition,which in return benefit company's long term development strategy.Such release of restriction would attract and encourage more high-tech companies pursue this kind of new way when preparing for IPO.Up to January of2020,there are already company got listed under board via special vote right structure.However,the dual class share contains high risk for outside investors,causing split of voting rights and residual right as well as agency cost.Invade minority Investors interests.At the same time,since we have a late start here in China and developed in a low speed,it is in shortage in this study and ways of protection to outside investors under this share setting.Existed flaw includes traditional supervision efficiency,internal control provision missing and Jurisdiction execution.This paper is taking MI as an example,discussing its unique feature,On the basis of dual-class share structure,the mechanism and transmission mode of dual-class share structure are analyzed.By analyzing MI's characteristic and dual class shares successful experience,This paper can provide some empirical support for the development of dual-class share structure in China and has obvious practical significance.Combining with the maturity of my country's capital market and existing supporting system regulations,it provides practical inspiration for resolving the contradiction between “financing and the maintenance of founder control” in the current enterprise development process,In addition,a protection system for the rights and interests of small and medium investors is formulated to prevent abuse of power and correct infringement behaviors.After the study,this paper puts forward some targeted and feasible suggestions,including strengthening information disclosure,optimizing corporate governance organizational structure,improving laws and regulations and supervision mechanism,etc.Thus enrich the domestic research on the application and practice of dual share ownership system.