Study On The Mechanism For Regulating Special Voting Rights Of Listed Companies

Special voting rights break the traditional "one share,one right" principle of shareholder equality,and has been controversial since its birth.2019 will see the introduction of special voting right in Sci-Tech innovation board,and 2022 will see the amendment of China’s company law to provide legal support for special voting right.It can be seen that China’s efforts to improve the basic system of capital market and promote the benign development of capital market.Special voting rights are significantly effective in warding off hostile takeovers and consolidating control rights,catering to the needs of technology and innovation companies.Special voting rights are in line with the theory of shareholder heterogeneity and the theory of adaptive efficiency,and have a significant effect on improving the efficiency of corporate governance.Therefore,special voting rights are welcomed by companies represented by technology innovation companies.However,the inherent drawbacks of special voting rights also bring various levels of risks.Special voting shareholders receive a majority of the voting rights with a minority of cash flow rights,which may bring about the problem of control abuse and thus the consequence of a dysfunctional internal monitoring mechanism.Under special voting rights,the agency cost of the company shows a tendency to fall before rising,and the founders may lose their initial special vision in the development of the company and thus fail.As China’s capital market is not yet mature and investors’ rationality is not high enough,special voting rights have the most significant impact on small and medium-sized investors in particular.A review of domestic and foreign literature on special voting rights reveals that it has become a very critical issue in the process of regulating special voting rights,how to limit special voting shareholders and protect small and medium-sized investors.Comparing with the relevant laws and rules in foreign countries,the relevant laws and rules in China do not cope with the inherent drawbacks of special voting rights well.However,it is not feasible to completely copy foreign laws or rules related to special voting rights.In regulating special voting rights,we should regulate companies that adopt special voting rights by strengthening information disclosure,restrain the control of special voting shareholders by strengthening the fiduciary duty of special voting shareholders,and establish a perfect post-event remedy mechanism to protect small and medium-sized investors.The special voting rights are regulated through multi-level and multi-faceted institutional improvements with a view to achieving the benign development of special voting rights in China’s capital market.This will not only ensure the superiority of special voting rights,but also avoid to a certain extent the losses caused to small and medium-sized investors due to the inherent disadvantages of special voting rights.