Make it easier for your entrepreneurship

让创业更简单

Equity structure design is the most important internal business model of a company and related to corporate governance. Equity design of early-stage startups mainly involves two essential issues: One is how to make use of a reasonable equity structure to ensure the founder's control over the company. The other is to help the company obtain more resources through equity distribution, including finding strong partners and investors.

股权设计是公司最重要的内部商业模式及实现公司治理的结构性命题，早期创业公司的股权分配设计主要涉及两个本质问题：一个是如何利用一个合理的股权结构保证创始人对公司的控制力，另一个是通过股权分配帮助公司获取更多资源，包括找到有实力的合伙人和投资人。

The benevolent see benevolence and the wise see wisdom, focusing on equity design, equity incentive, equity financing and equity control at the beginning of entrepreneurship, we provide solutions and value-added services for entrepreneurs, startups and investors.

仁者见仁，智者见智，我们立足于股权，围绕创业之初的股权设计、股权激励、股权融资、股权控制等展开为创业者、创业公司、投资人提供解决方案和增值服务。

Huawei’s Equity Structure

华为股权架构

Equity distribution implementation as early as possible 股权分配规则尽早落地

One of the problems with startups is that in the early days of the entrepreneurship, everyone is working hard together regardless of how many shares they own and how they are going to get them, as that is when the equity is just a blank check. As the future of the company is getting clearer and the value of the company is getting bigger, the founding members will be more and more concerned about how they can access to the shares. When the distribution methods cannot satisfy all the expectations, it will lead to problems of the team and negatively affect the development of the company.

许多创业公司容易出现的一个问题是，在创业早期大家一起埋头一起拼，不考虑各自占多少股份和怎么获取这些股权，因为这个时候公司的股权就是一张空头支票。到公司的钱景越来越清晰、公司价值越来越大时，早期的创始成员会越来越关心自己能够获取到的股份比例，而如果在这个时候再去论股权分配，很容易导致分配方式不能满足所有入的预期，导致团队出现问题，影响公司的发展。

Risk prevention equity design of startup companies 创业公司股权设计的风险与防范

From the perspective of China's business environment, we suggest that the equity should not be equally divided, as it is not conducive to introducing investors. Investors will concern that the company cannot develop well without a great leader. Therefore, the principle of equity structuring is to select a leader among shareholders and reserve shares for investors, new shareholders and employees' equity incentive respectively.

Design a good equity structure, capital strategy, dividends and exit mechanism, etc., can prevent the founder from being kicked out. Most failures of entrepreneurship are not due to the project itself but the equity is not well distributed. Dividend and exit mechanisms is the most likely to lead to internal conflict, so it needs to be designed with caution. Consulting with professionals for equity structuring when needed would be suggested.

从中国的环境及专业的角度上我们建议股权最好不要均分，这样不利于引入投资人，投资人也会担心公司没有带头人公司不能很好的发展。所以股权架构分配的原则为，股东之间选定一个带头人，预留出投资人的股份、新股东加入的股份、员工股权激励的股份。设计好股权比例、股权布局、资本战略、分红机制和退出机制等，防止创始人被踢出局。大多数创业失败不是项目的本身不好，而是股权没有分配好，分红机制与退出机制是最容易导致内耗产生的地方，所以需要谨慎对待。建议有条件的情况下应找专业人士做股权架构方案。

Equity Structuring Mechanism 股权分配机制

Equity structure example: How do youcontrol a ￥50 millioncompany for ￥50,000, but onlytake responsibility for ￥50,000

股权布局图：如何用五万元来控制5000万的公司，却只承担五万元的责任

Under normal circumstances, the people who participate in the company's shareholding mainly include the company's partners (founders and co-founders), employees, external consultants, and investors. When the equity structure is designed in the early stage of entrepreneurship, it is necessary to ensure that the equity structure design can facilitate late-stage financing, introduction of talents and incentives.

一般情况下，参与公司持股的人主要包括公司合伙人(创始人和联合创始入)、员工与外部顾问、投资方。在创业早期进行股权结构设计时的时候，要保证这样的股权结构设计能够方便后期融资、后期入才引进和激励。

What are the key points of equity structure design for founders, partners, key employees and investors?

股权架构设计针对创始人、合伙人、核心员工、投资人分别有哪些侧重点？

From the perspective of Founders: The essence of their appeal is control, so in the early design of the equity structure, the founder has a relatively large equity (generally recommended to be 2-4 times the average shareholding ratio of the partners) should be taken into consideration.

创始人维度：本质上的诉求是控制权，所以在早期做股权架构设计的时候必须考虑到创始人有一个相对较大的股权（一般建议是合伙人平均持股比例的2-4倍）。

From the perspective of Partners: the partnership philosophy and values of Partners/Co-founders must be highly consistent with the founder. As one of the owners of the company, partners hope to have a certain right of participation and power in the company. Startups have to share out a portion ofthe equity equally at the early stage (typically 8 to 15%).

合伙人维度：合伙人/联合创始人作为创始人的追随者，合伙理念价值观必须是高度一致。合伙人作为公司的所有者之一，希望在公司有一定的参与权和话语权。所以，早期必须拿出一部分股权来均分（这部分股权基本上占到8%-15%）。

From the perspective of Core staffs: the core employees play a crucial role in the company high-speed development stage, they expect the rights of receiving dividends in return. Equities shall be reserved in the early stage of equity structure design preparing for the rapid development of the company (generally recommend that 10% - 25% with proportional dilution be set aside after the initial distribution)

核心员工维度：他们的诉求是分红权，核心员工在公司高速发展阶段起到至关重要的作用，在早期做股权架构设计的时候需预留这部分股权，等公司处于快速发展阶段的期权就能真正意义派上用场（通常建议初次分配完之后同比例稀释预留10%-25%）。

From the perspective of Investors: Investors are in pursuit of high net worth return. For high-quality projects, their expectations are quick entry and quick exit. Therefore, to a certain extent, investors very reasonably require the liquidation preference and subscription preference. Specific Shareholding, such as Seed stage (5%-10%), Angel round stage (10%-20%), should be based on the valuation of investors.

投资人维度：投资人追求高净值回报，对于优质项目他们的诉求是快速进入和快速退出，所以在一定程度上说，投资人要求的优先清算权和优先认购权是非常合理的诉求，持股比例：种子阶段（5%-10%），天使轮阶段（10%-20%）。具体应根据投资人给出的估值为准。

Startup equity design and the importance of thePartners Equity Distribution Agreement 初创公司股权设计落地、《合伙人股权分配协议》的重要性

How does a startup design its equity structure? How to deal with the equity relationship between founders, co-founders, early employees, external resource providers, part-time entrepreneurs, angel investors and a series of stakeholders? What is the point for founders having a controlling interest in a company in order to maintain stability in corporate governance? For these purpose, a "partner equity distribution agreement" is suggested to be signed by the partners in order to appoint the rights and obligations between eachother.

一个初创公司该如何进行股权设计？又该如何处理创始人、联合创始人、早期员工、外部资源提供者、兼职创业者、天使投资人等一系列利益相关者的股权关系？以及为了保持公司治理的稳定性，创始人拥有公司控股权的意义何在？为此，合伙人之间最好签订一个《合伙人股权分配协议》，以此来约定彼此之间的权利和义务关系。

Generally, the agreement shall include contents about four aspects: the company, partners, implementation of partnership matters and change of partnership matters. Clarify the goals agreed upon by all partners and the overall planning from the establishment. Clarify the rights andobligations of all parties to achieve a common blueprint for entrepreneurship. When someone exits, no conflict would occur by following the pre-agreed rules. However, at present, the vast majority of domestic entrepreneurial teams do not have a partner entrepreneurial equity agreement.

协议总体可以分为四个方面：企业、合伙人、合伙事项执行、合伙事项变动。明确各方合伙人协商认可的共同奋斗的目标，从企业成立开始到未来一段时间内的整体性规划；明确各方的权责义务，实现彼此共同的创业蓝图。当有人离开时，就按照事先约好的制度办，这样大家都没有意见。但目前国内绝大多数创业团队都没有合伙人创业协议。

Before the investment comes in, the original venture shareholders can also reserve part of the shares in the equity pool for subsequent financing according to the company's financing plan at certain stages, and reserve part of the shares in the equity pool for continuous talent attraction and employee incentive. The original shareholders will distribute the remaining shares in an agreed proportion so as not to dilute the investors' shares at a later date.

而在投资进来之前，原始的创业股东在分配股权时，也可以先根据一定阶段内公司的融资计划，先预留出一部分股份放入股权池用于后续融资，另外预留一部分股份放入股权池用于持续吸引人才和进行员工激励。原始股东按照商定的比例分配剩下的股份，以免后期稀释投资人的股份。

What types of companies require a Partner Equity Distribution Agreement?

什么类型的公司需要《合伙人股权分配协议》?

• A new company that is in the process of incorporation or hasjust been set up, planning to establish a reasonable equity structure

• The number of shareholders is over 3 and the equity structureis complex

• Expecting new shareholders to join in the future or the old shareholders may exit

1、正在着手成立或刚成立的新公司，希望建立一个合理的股权结构

2、股东人数超过3人，股权构成较复杂

3、未来可能会有新股东加入，或者老股东退出

What are the specific and important contents in the Partner Equity Distribution Agreement? 《合伙人股权分配协议》里有哪些具体重要内容?

1.   Agree on theequity ratio and holdings method between the partners.

2. Agree on the timing and method of acquiring the ownership of the equity for partners (appoint a right time to obtain the ownership, for example, agree a four-year periodand 25% per year, after four years to get all ownership).

3.   Agree on partner exit mechanism (whether the equity maybe called in by the other shareholder when exit and at what price of compensation, etc.)

1、 约定合伙人之间的股权比例及持股方式。

2、 约定获得股权的时间和方式，给合伙人一定的股份(约定一个得权的时间，比如，约定4年的得权期，每干满一年，得到25％，4年之后获得全部应得的股份)。

3、 约定合伙人的退出机制(在合伙协议里可以约定退出时股权是否由其它股东收回，收回时按什么样的价格来补偿等)

The tax implications on corporate equity structure design

公司股权架构设计及对税务的影响

When cashing out by means of equity transfer, double taxation of corporate income tax and individual income tax is likely to occur, as well as the difference of tax liability caused by various tax rates. Therefore, the controlling shareholder may face the problem of choosing direct shareholding or setting up holding company for shareholding. Thus, equity structure should be designed at the early stage, for example:

a. For financial investors with cashing out plans: it is better to have direct shareholding structure to avoid double taxation,

b. For long-term holding equity shareholders: it’s recommended to set up a holding company as the shareholder, as a resident company enjoy tax exemption treatment for dividends,

c. Consider a limited partnership from the start: especially for shareholding platforms that are set up for employee equity incentives purpose.

基于个人-企业-企业的模式，套现（股权转让方式变现）时容易出现企业所得税与个人所得税重复纳税的情况，以及税率引起的税负差别。因此，控股股东可能面临选择直接持股或设置控股公司持股的问题。初期即应做好股权架构设计，如：

a. 对于有套现计划的财务投资人：最好用直接架构直接持股避免重复纳税，

b. 对于拟长期持有股权的股东：建议采取控股公司作为持股股东，这样居民企业取得的分红享受免税待遇，

c. 也可以一开始就考虑有限合伙：对于为员工股权激励而设立的持股平台，更应考虑成为有限合伙。

Hope this article was helpful! With rich experience, our professional team can assist you on equity structuring planning. Please contact us by scanning the service code listed below for the information related to (1) the initial stage, (2) the growth stage (angel/strategic investment),(3) the expansion period, and (4) the mature stage equity structures design, as well as the equity proportion model of the start-ups and the tax treatment in the equity transfer. From stock equity structure to tax planning we offer the most cost competitive services.

凭借丰富的经验，我们的专业团队可以帮助您进行股权结构规划。从股权结构设计到税务筹划，我们提供最具有成本竞争力的服务。关于公司各阶段（1）初创期（2）成长期（引入天使/战投）（3）扩张期（4）成熟期股权设计注意要点，及初创企业股权比例模型、股权转让中的税务处理问题，请扫码联系我们。