Equity allocation of startups

Startups allocate equity by adhering to the principles of founder control and equity binding, and cash in installments. Equity allocation categories are according to the proportion of capital contribution to the allocation, equity equally and reserved equity, etc.. Equity refers to the investor's rights due to the investment in the citizen partnership and to the enterprise legal person.

Legal Basis

Article 216 of the Company Law of the People's Republic of China

The meaning of the following terms of this law:

(2) controlling shareholders, means shareholders whose capital contributions account for more than fifty percent of the total capital of a limited liability company or whose shares account for more than fifty percent of the total capital of a joint stock limited company. (b) Controlling shareholder means a shareholder whose capital contribution accounts for more than fifty percent of the total capital of a limited liability company or whose holding of shares accounts for more than fifty percent of the share capital of a joint stock limited company; and a shareholder whose capital contribution or holding of shares is less than fifty percent, but whose voting rights based on his capital contribution or holding of shares are sufficient to have a significant influence on the resolutions of the shareholders' meeting or the general meeting.