The impact of dual-class share structure on corporate governance : A case study of Ucloud
Abstract
UCloud is the first company in China to adopt a differential voting rights system for its initial public offering. This paper examines
how the three founders of UCloud achieved absolute control and the implications of this structure. The study finds that the founders secured
multiple votes per share to obtain controlling interest and board control. While this approach supports long-term development, it introduces
governance risks by limiting other shareholders’ ability to constrain the controlling party’s actions. Therefore, it is crucial to ensure strict and
transparent information disclosure, enhance oversight of voting rights, and improve the regulatory framework for shareholder protection to
mitigate the risks associated with founder control.
how the three founders of UCloud achieved absolute control and the implications of this structure. The study finds that the founders secured
multiple votes per share to obtain controlling interest and board control. While this approach supports long-term development, it introduces
governance risks by limiting other shareholders’ ability to constrain the controlling party’s actions. Therefore, it is crucial to ensure strict and
transparent information disclosure, enhance oversight of voting rights, and improve the regulatory framework for shareholder protection to
mitigate the risks associated with founder control.
Keywords
Dual-Class Share Structure; Corporate Governance; Control Rights
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DOI: http://dx.doi.org/10.18686/fm.v10i1.13915
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