Zhiheng Viewpoint... Chen Hui lawyer: Shenzhen technology enterprises before financing, how to design the founder control.

Chen Hui, lawyer of Guangdong

for Shenzhen science and technology enterprises, equity financing often occurs in the rapid growth stage of enterprises, the entry of external capital not only changes the company's original equity ratio, but also changes the rights boundaries of shareholders' meeting, board of directors, shareholder agreement and management level. After the financing is completed, whether the founder still maintains a stable decision-making ability, can not only look at the shareholding ratio, the key is to systematically evaluate the corporate governance structure before financing.

The financing arrangements of 1. companies should be designed simultaneously with the governance structure.

Public data show that by the end of 2024, there were 3429 private venture capital funds registered in Shenzhen, with a management capital of 410.342 billion yuan, and the balance of science and technology loans in the city reached 2.18 trillion yuan in the first three quarters of 2025. As Shenzhen continues to strengthen the construction of technology finance and "20 8" industrial clusters, the equity financing needs of artificial intelligence, semiconductors, robotics, new energy, biomedicine, advanced manufacturing and other companies will remain active.

In this context, the financing of science and technology enterprises should not only think about solving the capital problem, but also consider adjusting the equity structure, employee incentives, articles of association, board seats and special rights of investors in the same round of financing.

2. founder control cannot simply be equated with shareholding ratio

the shareholding ratio is the basis, but not the only factor, in the basis of corporate control. The company's real decisions take place in the shareholders' meeting, the board of directors and the management; investors may also obtain protective rights such as veto power, director nomination right and right to know through financing agreements; at the same time, the internal authorization of official seal, bank account, financial system, core intellectual property rights and key business data will also affect the normal implementation of corporate governance arrangements.

The judgment of the "actual controller" in the new Company Law is not based on whether the shareholding exceeds 50% as the only criterion, but is more concerned with whether he can actually control the company's behavior through investment relationships, agreements or other arrangements. Thus, a founder's declining shareholding in the financing process does not necessarily amount to a loss of control. Even if it is still the largest shareholder with a shareholding of more than 50%, if the governance rules and financing terms are not properly designed, it may be subject to greater restrictions on key matters.

3. companies should focus on evaluating five levels of control before financing.

The first level is the equity ratio. Companies should measure the serial dilution of this round of financing, the employee incentive pool and the next round of financing, rather than just looking at the static ratio after a single round of financing.

The second level is the shareholders' meeting. A distinction should be made between ordinary resolutions, special resolutions and special investor consents to avoid including a large number of day-to-day business matters in an excessively high voting threshold.

The third level is the board of directors. The number of directors, the right to nominate, the manner in which the chairman is elected, the quorum for meetings and the voting mechanism all directly affect the efficiency of day-to-day decision-making after financing.

The fourth level is the financing agreement. Provisions such as priority liquidation, anti-dilution, repurchase, priority subscription, joint sale, right to know and veto on material matters need to maintain a reasonable boundary between investor protection and business efficiency.

The fifth layer is the operational control and key carrier. The legal representative, official seal, license, bank account, financial authority, core intellectual property rights, source code, data and the management authority of important subsidiaries should establish a clear authorization, custody and handover system.

The Enlightenment of 4. a Financing Project

in the 50 million yuan financing project of a Guangdong semiconductor testing equipment enterprise handled by lawyer Chen Hui, the initial concern of the enterprise was how much equity investors could get and the amount of financing. However, in the process of sorting out the project, it was found that the matters that needed to be handled simultaneously also included standardizing historical equity, employee incentive pool, subsequent rounds of dilution, board seats, rejection of major issues, anti-dilution, buyback and shareholder withdrawal arrangements, etc.

Therefore, the final plan does not pursue the proportion of investors' shareholding alone, but puts the company's shareholders' meeting, board of directors, management and investor rights in the same governance structure, and reserves space for subsequent financing.

Five Corporate Governance Inspections Proposed to be Completed Before 5. Financing

the first is to verify the equity bottom account and carry out continuous dilution calculations; the second is to check whether there is a conflict between the voting rules of the shareholders' meeting and the special consent rights of investors; the third is to check the nomination rights of directors, the quorum of the board of directors and the voting mechanism; the fourth is to review the special rights of veto, anti-dilution, priority liquidation, repurchase and other special rights in the financing agreement on an article by article basis; fifth, the operation control carriers such as seals, accounts, financial systems, intellectual property rights, data and subsidiary rights are checked simultaneously.

After the settlement of the financing, the articles of association, the register of shareholders, governance documents and internal authorizations should also be updated in a timely manner to avoid the financing agreement having changed the boundaries of rights and the actual operation of the enterprise remaining before the financing.

Epilogue

lawyer Chen Hui believes that the goal of the founder's control design is not to let the founder "one person has the final say", nor to weaken the reasonable risk protection of investors, but to establish a clear and predictable governance boundary between capital protection, founding team stability and company decision-making efficiency. For technology companies entering the financing cycle, it is usually more proactive to design the control issue up front than to repair the governance structure after the financing is completed.

Introduction to the Author

chen Hui, a lawyer and corporate equity lawyer of Guangdong

, has long been engaged in the legal practice of corporate equity structure, corporate control, equity incentive and equity investment and financing, and has experience in business management and independent directors of listed companies.