Research On The Improvement Of Special Voting Rights Rules Under My Country's Dual-class Equity Structur

With the booming development of science and technology and the Internet,new economy enterprises focusing on technological innovation are rapidly emerging.Due to the huge financing needs of such companies in their early development,in order to balance the contradiction between IPO financing and equity dilution,most companies attempt to break through the constraint of "one share,one vote" by endowing special voting rights to founding shareholders,forming a differentiated voting arrangement,This allows founders to control the company with minimal capital investment.The Keynesian law tells us that demand creates its own supply.To meet this demand,global capital markets have amended their listing rules to recognize the dual-class shares structure in the hope of attracting more new economy companies to enhance their international competitiveness.In order to better attract social capital and promote the rapid growth of China’s new economy companies,the China Securities Regulatory Commission(CSRC)has also licensed the Shanghai Stock Exchange to set up a Sci-Tech innovation board(STAR-Market)in 2019,officially opening the door for companies with dual-class shares structure to list in Chinese mainland.However,the dual-class shares structure is a highly controversial design,especially the special voting rights granted to the founding shareholders,which not only exacerbates the substantial inequality of shareholders but also worsens the agency problems already existing in companies,and therefore needs to be regulated through improved corporate governance mechanisms and regulatory measures.This paper is divided into four parts: PartⅠfocuses on compiling and analyzing the theories related to special voting rights under dual-class shares structure,starting from the background of special voting rights,and integrating the existing theories on shareholding structure in order to clarify the substantive efficacy and the advantages and disadvantages of granting special voting rights to founding shareholders under the dual-class shares structure.Part Ⅱ focuses on the problems in the exercise of special voting rights in companies with a dual-class shares structure: although such a shareholding structure can give full play to the personal advantages of the founding shareholders.On the one hand,the problems of aggravating agency costs and the intensification of the conflict of interests between the founding shareholders and the minority shareholders should not be underestimated.On the other hand,special voting rights have the function of "amplifier",which may amplify the problems already existing in the "one share,one vote" companies,resulting in offsetting their advantages and generating new problems,with an overall negative effect.Part III connects Part II and Part IV,and attempts to analyze the reasons for the above negative effects of special voting rights from the perspectives of shareholders’ interests and internal and external corporate governance based on the problems pointed out in Part III,while Part IV proposes targeted improvement proposals based on the reasons analyzed in Part III,firstly,to clarify the fiduciary duties of the founding shareholders,not only to clearly define the specific content of such fiduciary duties,but also to determine the fiduciary duties of the founding shareholders.Secondly,to build an internal and external monitoring system to ensure that the company’s business decisions are monitored internally and that the company’s information disclosure is standardized externally to ensure the effective operation of the checks and balances mechanism;and finally,to set up a sunset clause to clarify the period of application of the special voting rights to ensure that the special voting rights of the founding shareholders Finally,we set up a sunset clause to clarify the period of application of special voting rights and ensure that the special voting rights of the founding shareholders "get off at the end of the day",which ultimately ensures the limited governance of companies with dual-class shares structure.