Case Study Of Control Structure Design Of Ninebot Limited

The contradiction between equity financing and maintaining control rights,has always been a major problem that plagues the development of enterprises.Dual class shares structure and joint control structure are common practices to maintain the stability of control.At the same time,there are restrictions on foreign business access in our country’s Internet industry.Companies always use Variable Interest Entity to circumvent foreign investment supervision and achieve overseas listings.The long-term practical experience of overseas capital markets and the frequent departure of domestic leading Internet companies,have prompted our country’s securities regulatory authorities to gradually loosen restrictions on dual class shares and variable interest entities.This paper choosse the Ninebot Limited as the case study object,to analyze the motives,feature,effects and influences of its control structure design.Ninebot Limited,a company listed on the Science and Technology Innovation Board,is the first company using VIE structure and simultaneously applies dual equity and joint control structures.This paper uses the literature research mothod,case analysis method and comparative analysis method,to introduce the company profile of Ninebot Limited,the control structure when applying for listing,and the design scheme of control structure,and the design plan is focused on analysis.The study found that the motives of Ninebot Limited are to deal with the risk of equity diversification,to satisfy the founder’s psychological ownership,to take advantage of joint control,and to avoid the supervision of foreign investment.The feature of this scheme is the comprehensive application of concerted action and voting rights delegation,limited partnership employee share holding platform,‘equity plus option’ incentives,and special voing rights.On this basis,the study found that this design scheme satisfies the founders’ requirements for joint control,realizes the mutual influence of joint control and dual class shares structure,and realizes the stability of the existing control structure.Further research found that this solution alleviated the contradiction between equity financing and maintaining control rights,optimized the financial situation of the company,and ensured the stable development of the company’s long-term strategic layout.At the same time,it also increased the risk of controlling shareholders’ Tunneling behavior and enlarged the company’s‘founder effect’.This paper believes that the special control structure has applicable conditions.Dual class shares structure is suitable for companies with decentralized shareholding structure,outstanding founder ability,numerous institution investors and core technology.Joint control structure is suitable for companies with decentralized shareholding structure and common actual controller interests.Variable interest entities structure is suitable for companies in industries that have foreign investment restrictions,plan to list overseas,or have special corporate governance needs.When choosing the control allocation method,companies need to choose concerted action or voting rights delegation based on the type of shareholders,the application of a limited partnership employee stock ownership platform can take into account both incentives and concentration of control rights,the application of ‘equity plus option’ can meet special control requirements,the establishment of special voting rights needs to calculate a reasonable multiple.Finally,companies with special control rights structure need to strengthen the independent director system,improve the information disclosure system,and establish a post-relief system,to ensure that the interests of small and medium shareholders are not infringed.Through the research of this paper,it can provide certain reference significance for the company to decide whether to design and how to design a special control structure,and provide certain reference value for improving corporate governance.