On August 27, 2025, Lawyers Wang Yang and Min Xi, partners of Shanghai Hongqiao Zhenghan Law Firm, were invited by SMIC Juyuan Private Fund Management (Shanghai) Co., Ltd. (hereinafter referred to as “SMIC Juyuan”) to conduct a special legal training themed “Equity Investment Exit and Risk Control Practice”.
This training focused on the practical legal difficulties and operational details in equity investment exit paths. Taking “core issues in the exercise of repurchase rights” as the main line, it analyzed the five key elements in the exercise of repurchase rights one by one in combination with typical cases: exercise period, repurchase subject, trigger circumstances, concurrent rights, and bankruptcy impact. Meanwhile, it discussed practical implementation issues from the perspectives of contract clause design and optimization, litigation evidence preservation, and other aspects.
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Lawyer Wang Yang started with the latest view of “6-month reasonable period” from Fada Wang, suggesting that investment institutions clearly agree on the exercise period in the agreement and send a notice to exercise the right in a timely manner after the repurchase conditions are triggered, so as to avoid losing the right due to the expiration of the exclusion period. In the section on repurchase subject design, Lawyer Wang Yang elaborated by distinguishing between shareholder repurchase and company repurchase.
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In the part of trigger circumstances, Lawyer Wang Yang focused on sharing common trigger scenarios such as failure to list as agreed, change of main business, change of control, major integrity issues, material breach of contract, and litigation. Furthermore, he explained the judicial adjudication rules in the case of concurrent equity repurchase and performance compensation in combination with cases. Regarding bankruptcy risk, Lawyer Wang Yang emphasized that although company bankruptcy does not preclude shareholder repurchase, it will result in the impossibility of capital reduction, thereby affecting the enforceability of the company repurchase clause.
Partner Lawyer Wang Yang
In the clause design section, taking a standard clause template as an example, Lawyer Min Xi explained the optimization suggestions item by item, and elaborated on the relevant precautions in the design of notice clauses, period clauses, and jurisdiction/arbitration clauses. He stressed that contract clauses should be designed from the perspective of right exercise to reduce the space for disputes and the burden of contract interpretation during exercise, and in particular, avoid obstacles to right exercise caused by the contract clauses themselves.
Partner Lawyer Min Xi
In addition, the training also covered litigation evidence preservation, sorting out the types of evidence that should be focused on collecting in the five links of pre-investment due diligence, agreement signing, delivery, post-investment management, and exercise notice in stages. It emphasized that the “exercise notice letter” should include elements such as the basis for repurchase, trigger facts, number of repurchased shares, price calculation, and collection account, and recommended sending it by EMS express mail, retaining scanned copies and successful delivery records to ensure the validity of service.
At the end of the training, a “Q&A session on hot issues” was held, responding to high-frequency and cutting-edge practical issues such as “whether most-favored-nation treatment can replicate others’ exercise conditions” and “whether recovering investment funds without capital reduction procedures constitutes withdrawal of capital”, and putting forward compliance suggestions combined with the latest judicial precedents, providing practical legal guidance.
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This training featured systematic content and strong operability, fully demonstrating the professional depth and practical experience of Hongqiao Zhenghan Law Firm in the field of equity investment legal services. Participants stated that the explanations by the two lawyers were profound yet simple, with detailed cases, providing important support for them to build a risk-controllable and clear-path exit mechanism in the complex investment environment.
SMIC Juyuan focuses on equity investment in the integrated circuit industry, committed to long-term value investment, discovering and creating value. Co-founded by SMIC and a senior investment team, SMIC Juyuan manages assets of over 30 billion yuan, with investment targets covering the entire integrated circuit industry chain across all stages of equity investment including angel, VC, PE, listed company investment, and M&A investment. It has invested in more than 300 enterprises so far, some of which have been listed on the capital market.
Hongqiao Zhenghan specializes in complex dispute resolution, and has long acted in a large number of complex and difficult commercial cases, cross-border dispute resolution cases, as well as market-oriented asset and debt restructuring cases including bankruptcy. It provides professional dispute resolution services for large financial institutions, listed companies, governments and well-known enterprises. It has been consecutively awarded as National Excellent Law Firm, Shanghai Top Ten Law Firms, and Tier 1 in Corporate and Commercial Law by Chambers; it has also won awards such as Excellent Law Firm in Domestic/Cross-Border Dispute Resolution and Banking & Finance by China Business Law Journal. Adopting the LockStep partnership model, Hongqiao Zhenghan has built the entire firm into an integrated management lawyer team with clear professional division of labor to meet and exceed customer service needs.