Equal Thirds Is the Most Expensive Kind of Fairness
Three people building together, one-third each—nobody loses face, and the room feels good at the split. The cost shows up months later: the company can't decide. This lesson runs the voting thresholds, then explains why the core founder should hold 70%+.
Company Law splits shareholders' meeting resolutions into two tiers: more than half, and two-thirds or more. Remember those two numbers and you can grade any equity structure yourself.
A resolution of a shareholders' meeting shall be adopted by shareholders representing more than half of the voting rights. A resolution of a shareholders' meeting to amend the articles of association, increase or reduce the registered capital, or on a merger, division, dissolution, or change of the corporate form of the company shall be adopted by shareholders representing two-thirds or more of the voting rights.
Ordinary resolution line
Day-to-day shareholders' meeting resolutions. Clear this line and the company can run normally.
Special resolution line
Amend articles of association, raise or cut registered capital, merge, divide, dissolve, change corporate form. Fundraising almost always hits this tier—a capital increase is amending the articles plus increasing registered capital.
Be precise: with equal thirds, any two people add up to exactly two-thirds—the statutory count is enough. The real trouble is those three words: “must assemble.” Nobody can pass any resolution alone—not even a routine more-than-half vote.
How equal splits actually run
Every resolution needs at least two people in full agreement. If any pair among the three falls out, the remaining combo can't form a stable majority. Fundraising, amending articles, capital increases—all stuck at “go talk first.”
What happens after it freezes
The company still exists, the business still exists—but you can't raise, can't increase capital, can't bring in new shareholders. Stagnation itself zeros out value, and when everyone wants out, breakup also needs a two-thirds resolution.
So equal-split fairness is one-shot—it only holds on equity-day. Every later call is you paying for that day's fairness.
Pick an equity structure and see how it performs on both lines.
The core founder at 70%+ means two things.
One person clears both lines
70% is above both 50% and two-thirds—ordinary and special resolutions pass alone. Amend articles, raise capital, bring investors—no need to persuade anyone first.
Room left for dilution
Later come fundraising dilution and an option pool. Start at 70%, and after a few rounds you're still above the critical line. Start at 51%, and one round drops you under.
This isn't treating partners as outsiders. A startup needs a directional core with votes that can decide; the rest is dividends, options, titles, and trust.
- Company Law Article 66, paragraph 1, says deliberation methods and voting procedures are set by the articles of association (unless the Law provides otherwise). Articles can be tailored to your structure.
- The template articles from the company registration counter are the easiest generic version—many small companies just use them as-is.
- If you really must stay near-equal, write into the articles how deadlocks break—don't leave it for a future fight.
Act before things blow up; it's far easier than after.
- While all three still accept one directional core, use an equity transfer to move above 70%—price is negotiable; dividends and titles can compensate.
- If a company registration filing change is awkward now, sign a concert-party agreement or voting proxy first to concentrate the votes.
- Once you're already fighting, every plan needs their signature—and you no longer hold the chips.
Remember two lines: more than half, and two-thirds or more. Amending articles, changing capital, merger/division/dissolution sit on the second line.
Equal thirds are fair only on equity-day. Every later call needs two people aligned first—or the company freezes.
Core founder 70%+. One person clears both lines, with dilution headroom left.
Articles of association can be customized. If you insist on equal, write the deadlock break into the articles first.
Sources: Company Law of the People's Republic of China (revised December 29, 2023, effective July 1, 2024), Article 66. How voting-rights ratios are exercised follows the company's articles of association and the competent authority's practice. Verified 2026-08-10.