(By Bai Lituan) Over recent years increasingly more businesses have used incentive shares to retain key employees. They may hold shares in the subject company directly (hereinafter referred to as “holding shares directly”) or indirectly through a limited partnership i.e., a platform for employees to hold shares (hereinafter referred to as “holding shares indirectly”). What are the advantages and disadvantages of holding shares directly or indirectly? This article deals with this issue in the areas of business control and tax burden.
(By You Yunting and Wang Ting) Pursuant to China’s Company Law, any shareholder shall be entitled to inspect and copy the Articles of association, minutes of shareholders’ meetings, resolutions of meetings of the board of directors, resolutions of meetings of the board of supervisors and financial reports of a company in which he or she owns shares. However, if a shareholder operates a business in competition with a company in which he or she owns stocks, then when exercising the shareholder’s right to information, such inspection may result in leaks of confidential business and trade secrets. In today’s post, we will introduce this conflict, and discuss ways in accordance with relevant Chinese laws to balance this conflict of interests while maintaining a shareholder’s right to information and a business’ right to protect its trade secrets.