TY - JOUR
T1 - The regulation of the dual-class share structure in China
T2 - A comparative perspective
AU - Lu, Longjie
PY - 2020/4/25
Y1 - 2020/4/25
N2 - The last few years have observed many Chinese enterprises listing on US exchanges, where dual-class shares are permitted. To be competitive, Hong Kong and Singapore lifted the ban on dual-class shares, which eventually impelled China to join the race in 2019 by introducing dual-class shares to a new section on the Shanghai Stock Exchange (SSE)-the Sci-Tech Innovation Board. The dual-class share structure has both pros and cons. It can facilitate business development, whereas it may also be detrimental to investor protection. To deal with the downside, the operation of dualclass shares is usually subject to regulation. The USA and Hong Kong have adopted a light-touch and a heavy-handed regulatory approach, respectively. The differences between them are embedded in their market structures and the legal rules of investor protection. In terms of these two aspects, China is closer to Hong Kong rather than the USA. The current regulation in China, which is based primarily on the heavy-handed approach, is in the right direction. Nevertheless, the article argues that since there are flaws in the current regulation and the law of investor protection in China remains weak, further steps are needed to better control the risks in the operation of dual-class shares.
AB - The last few years have observed many Chinese enterprises listing on US exchanges, where dual-class shares are permitted. To be competitive, Hong Kong and Singapore lifted the ban on dual-class shares, which eventually impelled China to join the race in 2019 by introducing dual-class shares to a new section on the Shanghai Stock Exchange (SSE)-the Sci-Tech Innovation Board. The dual-class share structure has both pros and cons. It can facilitate business development, whereas it may also be detrimental to investor protection. To deal with the downside, the operation of dualclass shares is usually subject to regulation. The USA and Hong Kong have adopted a light-touch and a heavy-handed regulatory approach, respectively. The differences between them are embedded in their market structures and the legal rules of investor protection. In terms of these two aspects, China is closer to Hong Kong rather than the USA. The current regulation in China, which is based primarily on the heavy-handed approach, is in the right direction. Nevertheless, the article argues that since there are flaws in the current regulation and the law of investor protection in China remains weak, further steps are needed to better control the risks in the operation of dual-class shares.
UR - http://www.scopus.com/inward/record.url?scp=85091061323&partnerID=8YFLogxK
U2 - 10.1093/cmlj/kmaa004
DO - 10.1093/cmlj/kmaa004
M3 - Article
AN - SCOPUS:85091061323
SN - 1750-7219
VL - 15
SP - 224
EP - 249
JO - Capital Markets Law Journal
JF - Capital Markets Law Journal
IS - 2
ER -