Popular Science: Who Owns Bitmain? Can Zhan Ketuan Fire Liu Luyao?

According to the WeChat Moments of employees of the Mining Association, Zhan Ketuan issued a document on May 25, requesting the removal of Liu Luyao, CFO of Bitmain. (The screenshot did not cover the ID number. The deliberate release and dissemination of the information are suspected of violating citizens' personal information. Everyone should have basic legal knowledge.)

(Picture from Bixin Block)

You may be wondering, who owns Bitmain? Does Zhan Ketuan have the authority to remove Liu Luyao from his position? The following are my conclusions based on public information.

First, Bitmain’s corporate entity is registered in Cayman, Cayman controls the Hong Kong company, the Hong Kong company controls Beijing Bitmain and some other Bitmain companies in the mainland, and Beijing Bitmain also controls some Bitmain subsidiaries in the mainland.

Currently, Cayman and Hong Kong are controlled by Wu Jihan and Liu Luyao, and Zhan Ketuan has temporarily obtained the legal person of Beijing Bitmain through administrative reconsideration, citing the procedural error of the other party in changing the legal person. According to previous reports by Tiantian Lianxun, the business license of Beijing Bitmain is still in the hands of the police, while the official seal should be in the hands of Wu Jihan. Wu Jihan should be seeking to continue to change the legal person of Beijing Bit through Hong Kong.

The second question is, without an official seal and business license, does the legal person have the right to fire employees?

The Beijing Court website under the Beijing High People's Court explains it this way:

According to Article 38 of the General Principles of the Civil Law of the People's Republic of China, "the person who exercises the powers on behalf of the legal person in accordance with the law or the articles of association of the legal person is the legal representative of the legal person". The legal representative exercises the powers on behalf of the legal person and shall be responsible for the acts made in the name of the legal person. The official seal is not a necessary condition for the validity of the contract. In the process of signing a contract, after the offer and commitment, the parties agree on the intention and the contract can be established. As the legal representative of the company, the legal representative has the right to sign the contract to confirm the contract.
However, there are exceptions. Article 50 of the Contract Law of the People's Republic of China stipulates that "if a legal representative or person in charge of a legal person or other organization exceeds his authority to enter into a contract, the representative's behavior is valid unless the counterparty knows or should know that he has exceeded his authority." Therefore, if you know that the other party's legal representative has exceeded his authority but still sign a contract with him, the contract with only the signature of the legal representative but no seal will not be binding on the legal representative's unit.

On the surface, the legal person can remove Liu Luyao from his position in Beijing Bitmain. However, the second paragraph of the court website explains that it is also necessary to discuss whether the legal person and the person in charge have this authority? This depends on the articles of association of Beijing Bitmain. At present, we cannot see the latest articles of association of Bitmain. Beijing Bitmain is also a 100% shareholder of Hong Kong Bitmain controlled by Wu Jihan. In theory, it can change the articles of association and legal person of Beijing. So this is a Rashomon.

Zhan Ketuan is currently filing a lawsuit in Cayman. Investors and employees also hope that both parties can follow the Cayman judgment and the loser can withdraw according to the law. The continued struggle between the two parties in Beijing will not only affect the normal operation of the company, but also cause dissatisfaction with the government. In theory, the government should have warned both parties not to continue to make trouble during sensitive periods. If this continues, the biggest winner may still be Dr. Yang, who defeated Zhan Ketuan in 2019.