Zhiheng Special Issue | Zhiheng Selected Works 2025 Special Edition is officially released!
The 2025 Special Edition of “Selections from Zhiheng” has been released!
Zhiheng (Dalian) Law Firm (hereinafter referred to as “Zhiheng Dalian”) has released the 2025 Special Edition of “Zhiheng Collection”! This issue features nine insightful articles, bringing together the in-depth reflections and practical experience of six attorneys. From a professional perspective, it explores current hot topics and cutting-edge issues, with the hope of providing valuable insights and fostering meaningful dialogue. The abstract of this issue’s article is as follows; you are welcome to read it:
1. A Broader Perspective on the Stablecoin Industry Through Hong Kong’s Stablecoin Ordinance
Gao Shengjie(Senior Equity Partner at Zhiheng Dalian, Editor-in-Chief of this journal)
2025 is a pivotal year in the rapid development of digital currencies. In the past seven months, the stablecoin market has grown significantly to $250 billion, with transaction volumes exceeding $35 trillion—surpassing the combined totals of traditional giants Visa and Mastercard.
At the regulatory level, the U.S. GENIUS Act—officially the “Guidance and Establishment of a National Framework for Stablecoins Act”—underwent its final vote on June 17, 2025, marking the introduction of the first federal regulatory framework for stablecoins in the United States. Meanwhile, the Hong Kong Monetary Authority’s “Stablecoin Ordinance” (Chapter 656 of the Laws of Hong Kong), along with its associated implementation guidelines, officially came into effect on August 1, 2025, establishing a significant regulatory framework for Hong Kong’s virtual asset industry and representing a milestone.
For a time, stablecoins have moved from the cryptocurrency market into the global mainstream financial markets, becoming the hottest topic.
This article, grounded in Hong Kong’s Stablecoin Ordinance, explores the current state of the stablecoin industry and Hong Kong’s future potential in this space by examining the global stablecoin ecosystem, application scenarios, regulatory policies, and associated risks. It aims to help readers develop a basic understanding of the underlying principles and practical significance of stablecoins.
2. Equity Incentive Plan for Non-Listed Companies — Phantom Stock Incentive Program
Gao Shengjie(Senior Equity Partner at Zhiheng Dalian)
Wang Chao(Senior Partner, Zhiheng Dalian)
In China, the concept of virtual equity can be traced back to the “shen gu” system practiced by Shanxi merchants in ancient times. During the Ming and Qing dynasties, Shanxi merchants widely adopted this system, dividing shares into “yin gu” (owned by investors) and “shen gu” (owned by employees). Among them, holders of profit-sharing shares participate in profit distribution based on their managerial and operational capabilities, but do not hold any actual ownership.
This incentive model enabled Shanxi merchants to stand out in commercial competition, making them among the earliest adopters of the virtual equity incentive model among Chinese business entities. Since then, as the modern corporate governance system has continued to evolve, virtual equity incentives have come to occupy a prominent position in modern corporate equity‑based compensation schemes—particularly for non‑listed companies—owing to their numerous advantages, including the fact that they do not alter the company’s capital structure, the recipients of such incentives do not bear the risks associated with operational decision‑making, and the arrangements are flexible and easy to implement.
This article will examine and analyze the design rationale of the virtual equity incentive model, as well as the key review considerations for companies planning to go public, with a focus on the model’s fundamental principles and core advantages.
3.The Struggle for Control Among Founding Shareholders: An Analysis of the Value and Design Principles of Dual-Class Share Structures
Gao Shengjie(Senior Equity Partner at Zhiheng Dalian)
The latest 2023 revision of the Company Law of the People's Republic of China explicitly stipulates in Article 144 that a joint-stock company may issue shares with "a number of voting rights per share greater than or less than those of ordinary shares." These innovative provisions extend weighted voting rights to all joint-stock companies, granting market entities a high degree of autonomy and, at the legislative level, lifting the ban on the use of dual-class share structures.
Establishing a dual-class share structure is not as simple as merely stipulating differentiated voting rights in the company’s articles of association. This type of equity structure upends the balance of corporate governance under the principle of “one share, one vote,” granting excessive and unchecked power to a particular shareholder or group of shareholders during a specific period. If misused, it can seriously harm the interests of the company’s investors.
This article examines the historical origins, legislative evolution, and practical application of dual-class share structures, analyzing the strategic considerations for companies in designing such structures and identifying pathways to maximize their value. It aims to provide a reference for companies with financing needs as they seek to balance the control rights of founding shareholders with the interests of investors.
4. Taking “labor-related opportunistic claims” cases as an example, a brief analysis of corporate employment compliance and risk prevention.
Gao Shengjie(Senior Equity Partner at Zhiheng Dalian)
Liu Fang(Senior Partner, Zhiheng Dalian)
Peace(Zhiheng Dalian Full-time Attorney)
Recently, while drafting a corporate labor compliance plan for a client, the author came across a WeChat article published last year by the Shanghai Higher People’s Court on the court’s efforts to build a “digital court.” The article highlighted that the No. 1 Intermediate People’s Court of Shanghai has launched a digital-court application scenario designed to identify and issue early warnings for repeated litigation involving the same employee against multiple employers. This article prompted the author to recall a case of “labor racketeering” encountered during their practice in Shenzhen.
The “labor shakedown” case handled by the author occurred during the pandemic and spanned more than two years. Over that period, the same employee filed a total of seven labor arbitration applications on different grounds, triggering twelve litigation proceedings and nineteen court hearings. Due to the pandemic control policies in effect at the time, and because the trial was held in a different jurisdiction, the author repeatedly encountered travel restrictions while on business trips, even experiencing the distress of being unable to return home.
5. Legal Research on the Issue of Settling a Limited Liability Company Shareholder’s Claims Against the Company Against Their Obligation to Make Paid-In Capital Contributions
Gao Shengjie(Senior Equity Partner at Zhiheng Dalian)
Prior to the official implementation of the Company Law of the People's Republic of China (effective July 1, 2024, hereinafter referred to as the “New Company Law”), since the original Company Law did not impose strict limits on the payment period for a limited liability company’s registered capital, it was common in practice for shareholders of such companies to have not fully paid up their subscribed capital but to have advanced various funds on behalf of the company during its formation or actual operations, with the amounts advanced often exceeding the required contributions.
However, where a shareholder of a limited liability company holds a claim against the company arising from advance payments made on its behalf, may such claim be set off against the shareholder’s obligation to contribute capital? This issue has long been a subject of considerable controversy in judicial practice in China. This article, grounded in the relevant provisions of the new Company Law and based on the fundamental theories of debt, distinguishes and examines the various forms through which a limited liability company’s shareholders may convert their claims against the company into capital contributions. Furthermore, it draws upon case studies included in the Supreme People’s Court’s database to analyze and discuss these issues.
6.A Detailed Discussion on the Protection of Rights of Residential Property Consumers Following the Issuance of the Latest Judicial Interpretation on Actions for Objection to Enforcement—When the Property Is Subject to a Mortgage RightHow can one seek redress when a bank seizes and disposes of assets?
Sun Baoqi(Senior Partner, Zhiheng Dalian)
Real estate developers typically obtain development loans from banks to finance the construction and working capital of their projects. At the same time, in accordance with the banks’ requirements, they pledge the relevant properties as collateral in their entirety to the banks.
If a homebuyer remits the purchase price into the escrow account maintained by the real estate developer at the bank providing the development loan, the bank will, based on the receipt of funds and upon the developer’s application, release the mortgage on the corresponding property. Once the property meets the conditions for initial registration, the homebuyer may then proceed with the transfer of ownership as usual. However, in recent years, many real estate developers have faced deteriorating creditworthiness, and it has become common for them to require buyers to deposit the purchase price into the personal accounts of their employees or to pay in cash, thereby circumventing bank oversight. As a result, banks remain unaware of the sale of these properties and, having not received the corresponding funds, refuse to lift the mortgage.
At the same time, due to a breakdown in the cash flow of real estate development enterprises, they are unable to repay their loans to banks on schedule. Consequently, the banks have initiated legal proceedings against these enterprises, seeking repayment of the loans and confirmation of their mortgage rights. During the enforcement phase, the banks are demanding that all properties pledged as collateral by the real estate developers be appraised and auctioned off to satisfy the outstanding loan obligations. The properties subject to appraisal and auction are highly likely to include units that the developers had privately sold.
In such a situation, the bank’s security interest and the homebuyer’s expectancy of property rights are in direct conflict.
In my practice as a lawyer, I have handled numerous cases involving objections to enforcement proceedings and frequently encounter related legal inquiries: Clients discover that their neighbor has successfully obtained a property ownership certificate, only to find upon attempting to do the same that the property they purchased has been mortgaged to a bank; in some instances, clients only become aware of issues with their purchased property when the court posts a notice at their door requiring them to vacate within a specified period. In such a situation, can homebuyers protect their homes?
This article will be divided into three parts: a detailed analysis of the statutory provisions and their practical application, selected typical cases from the Supreme People’s Court, and relevant statutory references.
7. An Overview of the Legal System for the Recognition and Enforcement of Chinese Judgments Abroad
Gao Shengjie(Senior Equity Partner at Zhiheng Dalian)
Due to the surge in cross-border transactions and migration, the issue of enforcing effective judgments across different jurisdictions has become a hot topic. Especially given the current difficulties in enforcing judgments within China, cross-border enforcement of a debtor’s assets is increasingly becoming the key to breaking the deadlock in enforcement cases. As the inaugural article of the International Legal Insights journal published by Zhiheng (Dalian) Law Firm, this paper takes the legal frameworks and judicial practices governing the recognition and enforcement of Chinese judgments in various countries and regions as its starting point. It seeks to provide a macro-level legal overview of cross-border enforcement and to explore potential innovations in the mechanisms of multilateral judicial assistance among nations.
8. Legal Insights on the Cross-Border Enforcement of Domestic Judgments — Australia
Liu Shuyu(Senior Equity Partner at Zhiheng Dalian)
For many years, China has been Australia’s second-largest source of immigrants. According to data released by the Australian Department of Home Affairs, between 2023 and 2024, 7,561 Chinese citizens became Australian citizens, while an additional 21,806 Chinese citizens were granted permanent residency.
According to an analysis of the Australian Treasury’s Foreign Investment Report, over the three years ending September 2024, Chinese buyers purchased 7,312 residential properties in Australia, totaling A$8.8 billion, with an average price of approximately A$1.2 million per unit, making them the largest group of overseas buyers. Therefore, as Australia remains a popular destination for domestic migrants and investors, cross-border civil and commercial disputes between the two countries are also expected to gradually increase.
This article, drawing on the laws and regulations of both China and Australia as well as recent cases in which Australian courts have recognized and enforced Chinese court judgments, examines and summarizes the legal procedures for the recognition and enforcement of domestic judgments in Australia, with the aim of providing insights to readers.
9. A Brief Analysis of the Doctrine of Apparent Authority in Russian Law
Gao Shengjie(Senior Equity Partner at Zhiheng Dalian)
From 2018 to 2025, the author handled an international sales-of-goods contract dispute involving a Russian buyer. Because the parties communicated regarding order placement, shipment, and payment exclusively via email and never executed a written contract, the case featured voluminous and complex evidence.
Among them, Russian buyers changed more than ten staff members who were in charge of communication with the domestic seller at various stages of the transaction. During the trial, the Russian representative raised the issue of the authority of the liaison officer to act as an agent. In accordance with Article 16 of the Law on the Application of Laws to Foreign-related Civil Relations, the law of the place where the agency act takes place governs the agency relationship; therefore, in this case, Russian law was ultimately applied to examine the legal relationship of agency.
However, upon review, it was found that Russian law differs from China’s Civil Code in that it imposes stricter scrutiny on the examination ofAgency authority; moreover, in the absence of written authorization documents, it generally does not recognize the appearance ofAgency authority. This finding has posed a significant challenge to the present case.
Although the case was ultimately won through the author’s persistent efforts and other key evidence, the issue of agency in Russia-related transactions warrants careful consideration and proactive risk mitigation by domestic enterprises.
▲
If you would like to obtain the full text of the 2025 Special Edition of “Zhiheng Anthology,”
Please scan the QR code, enter your name and email address, and we will promptly send it to your inbox.
Past Recommendations
Zhiheng · Introduction