On May 10, 2023, Lecturer Fa Chen from King's College London School of Law in the UK, was invited to give the second lecture at the Law & Technology Forum of Wuhan University, with the theme of "The Dual-Class Share Structure and Development of Securities Market: A Comparative Empirical Analysis between China and the United States".
The lecture was hosted by Professor Hong Zhang from Wuhan University Law School. Associate Professor An'an Li and Yumei Nan from the Law School of Wuhan University, Lawyer Yajun Wang, a partner of Grandall Law Firm, and Liangjuan Wen, a partner of Jia Yuan Law Offices, served as discussants. More than 150 people , including university teachers, students, and lawyers at home and abroad, participated online.
Lecturer Fa Chen first introduced the theoretical background of the dual-class share structure. The dual-class share structure has moral hazard that aggravates the managers' pursuit of private interests, but its advantages are that it can resist the short-term market doctrine and attract companies to list. Secondly, by comparing the usage of the dual-class share structure in China and the United States, Lecturer Fa Chen thought that the reason why Chinese listed companies rarely use the dual-class share structure is due to high market access conditions and low actual market demand. Then, he conducted a specific analysis of the two reasons from both theoretical and practical perspectives. Subsequently, Lecturer Fa Chen introduced relevant practices in the UK. Despite the introduction of the dual-class share structure on the London Stock Exchange, many restrictions have prevented technology companies from listing in the UK.
During the discussion, Associate Professor An'an Li proposed a third explanation path, which is that China has always emphasized strict supervision of listed companies to prevent conflicts of interest, while the dual-class share structure may trigger such conflicts. Thus, this contradiction results in less application of the new system in China. In this regard, it is considered to use incentives and constraints to solve the application difficulties. Associate Professor Yumei Nan thought that the dual-class share structure can enhance competitiveness and has strategic significance for the reform and optimization of capital market in China; In the context of the revision of the Chinese Company Law, it is necessary to follow up and optimize existing rules. Lawyer Yajun Wang brought up some issues with imperfect laws and high usage thresholds in the dual-class share structure, and then empirically demonstrates the necessity of introducing the dual-class share structure in China. Lawyer Liangjuan Wen said that under the background of the implementation of the comprehensive registration system in China, the dual-class share structure has been extended to all listed sectors of the Shanghai and Shenzhen Stock Exchanges at the institutional level. However, Due to the moral hazard of the dual-class share structure, the relationship between innovation encouragement and risk prevention and control should be taken into account.
