| In recent years,countries have gradually liberalised their restrictions on a dual shareholding structure,allowing companies applying a same-share,different-rights structure to be listed on stock exchanges,and China is no exception.The academic community has been quite controversial about the two-tier shareholding structure.While affirming that it has excellent performance in the market and helps to realise the special vision of shareholders and increase the value of the company,it is also very concerned about the situation of unequal status caused by the difference in voting rights among shareholders,arguing that this differentiation increases the possibility of infringement of the interests of small and medium-sized investors compared with the traditional same share and same power structure.As the economy develops and the market opens up,a two-tier shareholding structure is now unstoppable and it would be a step backwards if we continue to dwell on whether it should be implemented.There are two sides to the coin,and what we need to do is to find the right regulatory path to address its pitfalls with a progressive system.Sunset clauses can be found in the listing rules of stock exchanges around the world,and can be used to promote a shift from a dual-tier shareholding structure to a traditional single shareholding structure,if necessary,in terms of special events or time periods.This can provide a more effective check on the control shareholders and provide a more effective check between the founders and the investors.Sunset clauses are also an important part of the current discussion on the issue of two-tier shareholding structures.Sunset clauses are practised on exchanges in Hong Kong,Shanghai and Shenzhen and are usually mandatory,but not fully effective.In the face of this somewhat rigid and ineffective situation,it is time to reconsider the path towards mandatory or arbitrary sunset clauses,and to consider a further combination of the two to create a composite model that gives companies as much autonomy as possible to govern themselves and stimulate market dynamics,while strongly limiting the abuse of rights by controlling shareholders through mandatory regulation.In addition,if the sunset of a dual shareholding structure is only conditional on the triggering of a specific event,the sunset clause may become a dead letter that does not allow shareholders with special voting rights to unilaterally dictate corporate decisions.Fixed-term sunset clauses,on the other hand,can compensate for their lack of effectiveness and,by improving the protection mechanism,naturally attract investors and enhance the competitiveness of the stock exchange itself.Therefore,the current application of sunset clauses should break away from the inherent limitations and seek a compromise by respecting the autonomous will of listed companies to introduce fixed-term sunset clauses as default rules and leaving the design of the specific content to the company’s discretion.For example,on the determination of the end time limit,only a reasonable interval is given through the listing rules,and the determination of the specific figure is left to the listed company.The expiry of the time limit is not necessarily the end of the double-tier shareholding structure,but rather requires a new decision on whether to continue the application of the double-tier shareholding structure based on the company’s current development prospects,expected value,etc.Other types of sunset provisions could also be refined to make them mandatory or arbitrary for different reasons.In addition,a system of review of sunset clauses in practice could be established,with the Exchange being the main body to initiate inquiries,to ensure that the soft law sunset clauses are still in place and operating effectively. |
