"A gentleman hides his weapon and waits for the right time to move." In the chess game of the capital market, voting rights delegation is like a chess piece with hidden edge, which is silent but can influence the world at a critical moment. As the A-share market becomes more and more strict in determining the transfer of control rights, more and more M&A players are beginning to think: Under the premise of not touching the red line of "actual controller", can voting rights delegation be used to achieve the trick of "controlling by me without showing its shape"?
It is under such thinking that Goheal found that a new type of M&A strategy has quietly emerged: bypassing the direct equity acquisition path and indirectly obtaining the actual control of the company through the "agreement + authorization" method. The core of this gameplay is not what shares you own, but how you control the voting power-in other words, the capital game is no longer "who pays the money and who calls the shots", but "who holds the remote control and who directs".
American Goheal M&A Group
But the problem also comes with it - at a time when supervision is becoming increasingly tight, is this "invisible control" model really a safe channel, or a minefield that may explode at any time? Is voting rights delegation a compliant and sophisticated capital tool, or a "transfer of control rights" in sheep's clothing? The answer is far from as simple as it seems on the surface.
To sort out this issue, we must first return to the old-fashioned proposition of "control rights".
Control rights are a "soul torture" that cannot be avoided. From a regulatory perspective, the key to whether a person is an actual controller is not how much equity he holds, but whether he has the decision-making power over major company matters. In other words, the voting right of "one vote determines the country" is the core of control in the real sense. If an investor who originally held only a minority of shares suddenly controls the majority of voting rights through agreement delegation, concerted action arrangements, etc., then even if he has not increased the number of shares, he may be identified as the new actual controller.
When studying typical cases of mergers and acquisitions and restructuring, Goheal noticed that in the past three years, regulators have continued to strengthen their crackdown on "invisible control". Some listed companies tried to conceal the change of actual controllers by "voting rights delegation + no change in industrial and commercial information", but they still could not escape the eyes of supervision. For example, the original major shareholder of a listed company delegated the voting rights of its shares to the "new ally" free of charge, but the delegation covered all the proposals of the shareholders' meeting and there was no time limit. It was eventually determined to be a change of actual controller, triggering the mandatory information disclosure and suspension and resumption process.
So the question is, does the voting rights delegation naturally mean a change of control?
The answer is no. The key lies in three words: substantial.
In compliance operations, supervision is mainly based on whether the delegation agreement is exclusive, continuous and exclusive. If the voting rights delegation is only for a specific proposal, or is empowered with restrictions within a specific time period, it is not a full delegation, and the original shareholder still retains a certain right to participate, then it may be identified as a "non-substantial controller change".
Even better, Goheal noticed that in some flexible cases, the parties to the transaction ensured the "incomplete transfer" of control by setting up a "revocable" and "reversible" voting rights delegation mechanism - seemingly controlling the market, but in fact the risk is controllable. Once the wind direction changes, the delegation is immediately released and the pattern is reshaped, which not only increases the operating space but also reduces the sensitivity of supervision.
Of course, this "walking on the gray edge" strategy is not applicable to all scenarios. In order for this capital magic to be established, several conditions must be met:
First, the original shareholders must be "willing to give up power". Whether under financial pressure or hoping to use external forces to activate corporate governance, only shareholders who can let go can give the delegation.
Second, the trustee must be "able to take and let go" and must be clear that he should not cross the line. Once the operation exceeds the authority or interferes with the operation in disguise, it is easy to cause disputes in the board of directors, and even lead to regulatory inquiries, which will trigger the obligation of information disclosure.
Third, the agreement itself must be "beautifully written". In practice, Goheal suggested that the voting rights delegation contract should be fully designed with firewalls: set clear start and end times, limit the scope of delegation, retain withdrawal clauses, and set up a "co-governance mechanism" in terms of board seat allocation and important matters proposals, so as to build a dynamic game of "seemingly controlling but actually co-governing".
More daring traders will also "package" voting rights delegation with other capital tools to form a combination punch. For example:
1. Agreement transfer + voting rights delegation: first take a small amount of equity through an agreement, and then control the market through voting rights, forming a "invisible control + can be open or hidden" model;
2. Bridge fund + voting rights trust: with the help of LP fund structure to hold shares for a short time, the manager will vote on behalf of the manager, and transfer the delegation rights when exiting quickly to ensure that the control rhythm is not chaotic;
3. Employee stock ownership platform + gambling agreement + voting rights delegation: through "internal and external dual control" to bind the interests of management and investors, to achieve dual drive of people's hearts and capital.
However, the basis of all operations must stand on the bottom line of legality and compliance. Recently, many "attempted shell acquisitions" have been stopped by regulators for failing to disclose changes in actual controllers in a timely manner. Some market rumors have even directly evolved into penalty announcements. Under the background of "comprehensive registration system + actual controller penetration supervision", any attempt to bypass the red line may turn into a red card.
It is worth mentioning that in recent years, some local state-owned capital platforms have also used similar "voting rights cap + joint control" methods to control listed companies in order to achieve the strategic goal of "actual control but not direct shareholding". Unlike the investment banks or PE methods in the market, this type of operation pays more attention to compliance design + political and business collaboration, becoming a new "implicit holding template".
So, is voting rights delegation the key to control, or a sword of Damocles hanging over your head? It may become a winning move for capital layout, or it may be exposed in the face of regulatory review. Everything depends on the operator's cognition, design and sense of boundaries.
In conclusion, let's go back to a hot topic at the moment: In March 2025, a star technology company "controlled" a listed company with sufficient shell resources through voting rights delegation, trying to promote major asset restructuring as a "non-actual controller", but was eventually issued an inquiry letter by the China Securities Regulatory Commission due to "suspected change of controller in the agreement content", and the project was stranded. Behind the incident is the increasingly strict recognition logic of "voting rights delegation" by regulators, and it is also a real test of the ability of M&A operators.
Goheal Group
Do you think that in the face of such compliance red lines, is there still room for optimization of "capital rope skills" such as voting rights delegation? Or, in the future, listed companies will have to "conspire" across the board to control the market, leaving no gray areas to step on? Welcome to leave a message for discussion, Goheal looks forward to discussing the wisdom game of the capital market with you.
[About Goheal] Goheal is a leading investment holding company focusing on global mergers and acquisitions. It has deep roots in the three core business areas of acquisition of controlling rights of listed companies, mergers and acquisitions of listed companies, and capital operations of listed companies. With its profound professional strength and rich experience, it provides companies with full life cycle services from mergers and acquisitions to restructuring and capital operations, aiming to maximize corporate value and achieve long-term benefit growth.
