{"id":61467,"date":"2023-01-12T09:25:34","date_gmt":"2023-01-12T01:25:34","guid":{"rendered":"https:\/\/www.law.cuhk.edu.hk\/app\/?page_id=61467"},"modified":"2023-02-06T15:39:26","modified_gmt":"2023-02-06T07:39:26","slug":"dual-class-share-structures-dcss-in-the-uk-and-china-by-dr-min-yan-online","status":"publish","type":"page","link":"https:\/\/www.law.cuhk.edu.hk\/app\/centre-for-comparative-and-transnational-law\/comparative-public-law-research-forum\/dual-class-share-structures-dcss-in-the-uk-and-china-by-dr-min-yan-online\/","title":{"rendered":"CCTL Corporate Law and Governance Cluster Seminar \u2013 \u2018Dual-Class Share Structures (DCSS) in the UK and China\u2019 by Dr. Min Yan (Online)"},"content":{"rendered":"\t\t
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CCTL Corporate Law and Governance Cluster Seminar \u2013 \u2018Dual-Class Share Structures (DCSS) in the UK and China\u2019 by Dr. Min Yan (Online) <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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\n\n12 January 2023\n<\/span>\n\n<\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t
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<< Back to Comparative Corporate Law and Governance Cluster<\/a><\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Unequal voting rights arrangements under dual class share structures are increasingly favoured by entrepreneurs and founders of technology companies, in order to retain a degree of control over the company that is disproportionate to their equity shareholdings. The rise of such share structures around the world has put competitive pressure on both UK and Chinese governments to relax the one share, one vote principle in their stock exchanges to ensure their equities market remains fit for the future development of the economy.<\/p>

There is, however, a long tradition of institutional investors\u2019 distaste for dual class share structures. For example, the near extinction of dual class listings in the UK capital markets can be largely attributed to the opposition of large British institutions. In this seminar, Dr. Min Yan would first address the conflict between the demands to attract listings from high-tech and innovative companies and concerns of a race to the bottom, and rebut criticisms based on investor protection in the UK context and argue permitting dual class companies to list in the Premium Segment, the higher level of regulatory protection provided in the premium listing regime would help enhance minority shareholder protection and shareholder engagement. The debate in the Chinese context would also be discussed.<\/p>

When permitting dual class listing, both the UK and China adopt additional safeguarding measures to restrain the potential abuse of controllers\u2019 weighted voting power. Hence, the second main aim of this seminar is to analyze these measures in detail and examine their intended and unintended impact. Dr. Yan would argue mandatory safeguarding measures are a double-edged sword, which not only help mitigate increased governance risks but also undermine the insulation of controllers from external investor and market influence. In other words, too many safeguarding measures would undoubtedly affect the intrinsic value of dual class shares. Thus, what policymakers and regulators should really focus on is how to use this double-edged sword to strike a balance between maintaining a flexible capital structure and controlling the associated governance risks, or perhaps to explore more of the\u00a0<\/span>ex post<\/em>\u00a0<\/span>mechanisms, to reduce the reliance on mandatory safeguarding measures as\u00a0<\/span>ex ante<\/em>\u00a0<\/span>constraints.<\/p>

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