Handling Gu Yong turned out to be easier than expected.
After the banquet, Gu Yong returned to the company, full of nothing but praises for Teacher Han.
17.5%—the cost was indeed a bit high, but Han Lie was swift!
Otherwise, if operations had stopped, the losses would have been far greater than what a paltry two percent could fix.
In the afternoon, Han Lie and Liu Minghao made a trip to the law firm to sort out the subsequent work.
"Tuesday morning, we’ll go to Ming Capital to sign the agency agreent, to fully represent Ming Capital in initiating the securitization operation of the Ming Capital project, and then sign contracts in sequence with the trust, the securities firm, the bank, and the guarantee institution."
Liu Minghao handed Han Lie a stack of docunts, explaining them one by one. "This is the trust fund I helped you set up in Singapore. The assets injected into it are your future core source companies. Take your ti looking through it, and I’ll explain anything you don’t understand bit by bit."
What exactly is a trust?
Essentially, it’s a legal relationship.
After briefly flipping through the docunts, Han Lie casually asked, "Why set it up in Singapore?"
"Singapore’s secrecy law allows anonymity."
Han Lie understood imdiately.
"OK. So, the core holding company that’s being injected is an investnt company registered in the Cayman Islands?"
"Right!"
Liu Minghao realized that Han Lie was quite knowledgeable about legal matters, so he didn’t waste words and continued, "You hold 100% of a Cayman HL company through the trust fund, and HL has registered Lihuo Holdings in Hong Kong Island, which invests in a wholly foreign-owned company in China called Phoenix Holdings.
Phoenix Holdings is a limited partner (LP) of Sky Capital.
Sky Capital is your platform company in China, a limited partnership enterprise.
Currently, Sky Capital only has two partners: one is a general partner (GP) called Han Shi Holdings, and the other is the LP, Phoenix Holdings.
Han Shi Holdings is your personal wholly-owned limited liability company, with a registered capital of 100,000 yuan.
How much of Sky Capital’s shares the GP and LP each hold, I’ll adjust according to your opinion in a mont."
People lacking professional knowledge would probably be confused by Liu Minghao’s explanation by now.
Simply put, Old Liu was designing the top-level structure for Han Lie’s companies.
The goal is to spread out responsibility.
A limited partnership is established by 2 to 50 partners. Among them, the general partner (GP) bears unlimited joint liability, while limited partners (LP) take on limited liability.
If the enterprise owes 10 billion to the outside world, they can’t go after the LP for it; after all, they are a "limited partner."
But the GP holds all the control of the enterprise. Even if he only owns 1% of the shares, he is still the absolute boss and bears unlimited liability.
So, if a limited partnership goes bankrupt with a debt of 10 billion, all of it goes to the GP.
The problem is, the GP can be a "sole proprietorship limited liability company" with a registered capital of 100,000; thus, it only bears 100,000 in limited liability. Any more than that, sorry, I can’t afford it.
Once the responsibilities are clearly separated, how are profits distributed then?
Use the LP company Phoenix Holdings, which has substantial control, to obtain 99% of Sky Capital’s profit share, and use Han Shi Holdings to assu the GP responsibilities.
I take all the profits, and I only bear 100,000 in liability.
Does this feel familiar?
Right, Jia Xiaozhou’s happy-go-lucky Holdings and Boss Ma’s little Ant all play by the sa rules.
Of course, in real cases with significant social influence, there’s a very good chance that the court will rule "unclear property boundaries, denial of corporate legal personality, affiliates should bear joint responsibility for the company’s insolvent debts, and trial by substantial consolidation."
Once the judgnt is passed, all responsibilities still converge onto the actual controller.
Therefore, Jia Xiaozhou can’t return to the country; once he does, he’s finished.
And the solution is to use an anonymous international company, through multi-layered holdings, to mask its associations. Even better, set up another target that’s out in the open.
Now, do you understand what a real white glove is?
You are the actual controller and GP of the company; I use an anonymous international company as the LP. On the surface, the company hangs on your every word, but in reality, I take away a large portion of the profits.
Ah, and I don’t bear responsibility.
To speak the honest truth, since the ’Partnership Enterprise Law’ was anded in 2006, quite a few people have been playing this ga.
Once trouble starts, the general partner runs off imdiately. Who knows which ghostly figure the limited partner corresponds to?
And most ordinary people are at least 15 years behind in understanding similar events.
The financial industry was the earliest to realize this; at the sa ti, it’s a hotbed for such ghostly figures to run amok.
That’s why Zhang Xuefeng advises students, "If you have no background and aren’t pretty, don’t study finance." Han Lie thinks there is sense to it but firmly disagrees.
Indeed, it’s hard for finance students who aren’t from Qingbei, or the two finance and one trade institutions, to get by.
But if you’re willing to fight, the things you can learn in the finance industry—the insight you can gain, and the horizons you can broaden—are hard to compare with other industries.
Even if you really can’t make it and need to change careers, the enhanced thinking, capabilities, and awareness are your important assets.
Nowadays, every industry is competitive. Wherever you go to make your way, you have to fight.
The sa ti spent growing and earning in the finance industry is the most efficient.
Which industry is the least efficient? Pure physical labor.
Unfortunately, later on, the financial industry’s basic positions were mostly replaced by machines. The barrier to entry grew higher and higher. So, you still have to study hard and push your education level up.
Han Lie and Liu Minghao discussed for a while longer, and finally split the platform company Sky Capital into two parts.
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