Founder Decoupling

Founder Decoupling

Over three years Qfin dismantled the founder control typical of a Chinese ADR: 20-vote super-voting shares collapsed to one share, one vote in 2023, the "360" brand was retired, and in December 2025 the acting-in-concert tie between founder Hongyi Zhou and Qfin's largest shareholder was severed, so 360 Group's related-party dealings fell away. Control is unusually clean for the group; the cost is that insiders now own just 1.1%, leaving alignment to a distribution policy rather than skin in the game.

Who controls the business, and whether minorities share in what it earns, is the governance pillar of the case — and it feeds directly back into whether the capital return documented in Margin of Safety can be trusted. On the evidence, Qfin's governance has moved in the minority's favour, steadily and deliberately, which is the opposite of the usual China-ADR entrenchment story. The qualifier is that a cleaner structure is not the same as a strongly aligned one.

From super-voting to one share, one vote

At its December 2018 IPO, Qfin — then 360 Finance — was a founder-controlled company in the fullest sense. Hongyi Zhou, the founder of the 360 Group internet empire, was the sole holder of Class B shares carrying twenty votes each, and through them he commanded 76.4% of the company's voting power against a far smaller economic stake [1]. Three years later the arithmetic was unchanged: at the end of 2021 all directors and executive officers as a group held 17.1% of the shares but 75.8% of the votes, the gap being Zhou's super-voting block [2].

That structure is now gone. On the completion of Qfin's Hong Kong secondary listing in November 2022, Aerovane — the vehicle holding the Class B shares — delivered a conversion notice turning every super-voting share into an ordinary one-vote share on a one-for-one basis [3]. An extraordinary general meeting on 31 March 2023 formalised it, re-designating all authorised Class B shares as Class A and changing the company's name from 360 DigiTech to Qifu Technology [4]. As of February 2026 no Class B shares exist and, in the company's own words, "no shareholder had different voting rights from other shareholders" [5].

Source: 2018 — Zhou's 76.4% at IPO [6]; end-2021 — directors and officers as a group 75.8% of votes [7]; Feb-2026 — Aerovane's 19.1%, now one vote per share [8]. The first two bars reflect 20-vote super-voting shares; the last is one-share-one-vote.

The ownership table itself confirms how diffuse control has become. Aerovane holds 46,520,952 shares, or 19.1%; the next-largest disclosed holder, the investment firm Aspex Management, holds 5.3%; and all ten directors and executive officers combined own 1.1%, with the CEO's 0.3% consisting mostly of unexercised options [9].

Source: FY2025 20-F beneficial-ownership table as of Feb 28 2026; public float is the residual [10].

The final step severed even the founder's indirect link. Aerovane is a BVI company owned not by Zhou himself but by his two children, Henry Zhiheng Zhou and Risa Ruoshan Zhou; Zhou had been deemed to beneficially own its shares only through a voting-and-dispositive-power agreement with them. In December 2025 the three signed a termination letter ending that arrangement, and Zhou "ceased to be deemed to beneficially own any" of the shares Aerovane holds [11]. The founder is now, formally, not a beneficial owner of the company he built, and the largest block sits with a family holding vehicle that carries no board seat and no voting premium.

Related-party ties, cut back

The same December 2025 termination cascaded through Qfin's related-party disclosures. Because Zhou no longer controlled the shareholder tie, three counterparties long identified with him — 360 Group, Shanghai Qibutianxia, and Kincheng Bank of Tianjin — all "ceased to be our related party in December 2025," and their year-end balances dropped out of related-party reporting [12]. The framework collaboration agreement with 360 Group, signed at the 2018 IPO to cover technology, user traffic, and trademark licensing, had already been terminated in August 2025 [13]. The app rebrand from 360 Jietiao to Qifu Jietiao in 2024, and the corporate-name change to Qfin Holdings in June 2025, complete the picture: the "360" identity that once anchored user acquisition has been fully retired [14].

The dealings themselves were never large relative to Qfin's ¥5,990 million of net income. Payments to 360 Group for advertising and services ran ¥236.3 million in 2023, ¥233.3 million in 2024, and ¥240.0 million (US$34.3 million) in 2025 — roughly 4% of net income, charged on cost-per-action, cost-per-sale, and fixed-fee formulas [15]. Referral services from Shanghai Qibutianxia stopped entirely after 2023 [16].

Sources: 360 Group services and Qibutianxia referrals [17]; Kincheng Bank deposits [18].

The one item that warranted a second look was Qfin's cash. Through 2023 and 2024 it parked about ¥3.0 billion of deposits at Kincheng Bank of Tianjin, a lender affiliated with Zhou — deposits that earned ¥145.7 million and ¥119.3 million of interest in those years [19]. Placing several billion renminbi of a public company's cash at a founder-affiliated bank is exactly the kind of arrangement a minority holder should scrutinise. By the end of 2025 that balance was nil [20]. The entanglement was real; it has been wound down.

Alignment without a controlling owner

A cleaner control structure resolves the entrenchment risk but creates a subtler one: with the founder's family block held at arm's length, no board seat, and no voting premium, Qfin no longer has a large owner-operator whose personal wealth rides alongside minority holders. Directors and officers own 1.1% of the company, and the aggregate cash paid to all directors and executive officers in 2025 was ¥18.9 million (US$2.7 million) — modest for a business earning ¥5,990 million, which keeps the cost of the management team low but also means their fortunes are only lightly tied to the share price [21][22]. Alignment now runs mainly through option grants and, more importantly, through the capital-return policy: a board-set commitment to distribute 20% to 30% of each half-year's net income as dividends, on top of the buyback [23].

The board that now sets that policy is structurally independent. It has nine directors [24], the chairman and CEO roles are separate, and an independent director, Fan Zhao, chairs both the compensation and the nominating-and-governance committees [25]. The senior operators, though, remain of the 360 lineage — CEO Haisheng Wu was a 360 Group product director and CFO Alex Xu the former co-CFO of Qihoo 360 — so the human continuity with the founder's orbit outlasts the ownership and brand ties that have been cut.

Two caveats keep this from reading as unqualified strength. First, Qfin is a foreign private issuer that elects Cayman home-country governance practice, and its own filing states that neither Cayman law nor its charter requires a majority-independent board, so "our shareholders may be afforded less protection than they otherwise would under the Nasdaq corporate governance listing standards" [26]. The independent board is a choice, not a mandate. Second, the improvements in control cannot reach the structural limits set out in Margin of Safety: Qfin is a Cayman holding company over onshore VIEs, its ability to pay dividends depends on PRC subsidiaries whose distributions are restricted [27], and, because the courts of the Cayman Islands and China offer no reciprocal enforcement of U.S. judgments, "it may be difficult for a shareholder to effect service of process within the United States" against the company or its China-resident directors [28]. Good conduct by the board does not convert an unenforceable structure into an enforceable one.

The read

The governance evidence supports the trustworthy-capital-return read more than it complicates it. Qfin has spent three years doing what most founder-led Chinese ADRs never do: collapsing super-voting control to one share one vote, retiring the brand and framework agreement that bound it to the founder's group, unwinding a multi-billion-renminbi related-party deposit, and finally severing the founder's deemed ownership altogether. Each step reduces the channels through which value could leak away from minority ADS holders, and it happened while the company was also returning roughly half its market value to those holders in a single year. That is a consistent picture: a company being run for its shareholders rather than around them.

The honest counterweight has three parts. Insiders own only 1.1%, so the alignment is procedural — a distribution policy and options — rather than the deep skin-in-the-game of an owner-operator. The capital return that policy produces has been willing but not shrewd: as Margin of Safety showed, the 2023–2025 buybacks were struck at average prices well above today's, so cash was distributed rather than compounded at a discount. And the VIE, currency-control, and enforceability constraints that cap what an ADS holder can actually claim are untouched by any of this.

What would move the read: a resumption of sizeable related-party dealings, or cash again migrating to affiliated institutions, would signal the decoupling was cosmetic; conversely, buybacks executed near or below current prices, or a further tightening of governance to full Nasdaq standards, would turn a clean structure into a demonstrably aligned one. For now the structure is clean, the alignment is adequate rather than strong, and the direction of travel has been firmly toward the minority holder.