On China's Enterprises Through Special Purpose Companies Listed Overseas Regulators

By this Paper, the author proposes to shed light on the supervisory issues and relevant legal matters in connection with the offshore listing of Special Purpose Vehicle ("SPVs").There are a good many of advantages by way of offshore listing of SPVs, such as offshore financing prospect, cost-saving, efficiency, privilege of"Super-national"treatment and so on, therefore many Chinese enterprises choose to be listed in such"curved"way. However, such phenomena also result in capital flight, assets loss, taxes loss and other problems, and the supervision evasion of domestic laws to certain extent. Accordingly, it is necessary for China to impose supervision over the activities of the offshore listing of SPVs. From supervision vacuum to full scale of strict supervisory procedures, the attitude of China has been changed for several times. But the promulgation of the"Provisions on the Takeover of Domestic Enterprises by Foreign Investors"reveals the determination and attitude of China preferring strict supervision over SPVs. Although the new supervisory policy recognizes and justifies the offshore listing practice, it also makes Chinese enterprises, especially the small and medium-size enterprises, face financing difficulties, consequently, the offshore indirect listing falls into the down-side phase. In the face of such circumstance, it is necessitate for China to take multi-level measures, such as detailing and perfecting relevant supervision laws and regulations, building up a multi-level domestic capital market, strengthening the cooperation with listing country and so on with a view of regulating and directing the offshore listing of enterprises, by which the problem could be finally resolved.Firstly, the Paper summarizes five phases of developments of the offshore listing of Chinese enterprises and points out the listing pattern preferred by Chinese enterprises, i.e. offshore listing by virtue of SPVs, together with an analysis of the basic steps of such pattern, which smoothly leads out the next chapter. Subsequently, in order to fully understand SPVs, it presents a detailed analysis of the definition and characteristics of SPVs and the incentives of Chinese enterprises to be listed offshore by virtue of SPVs; furthermore, it analyzes the case of"GOME Electronical Appliance Listing Case"to illustrate each procedures of offshore listing of SPVs. Then, the Paper makes a great effort on the supervision over SPVs in China, especially on the section regarding the supervision over SPVs in the"Provisions on the Takeover of Domestic Enterprises by Foreign Investors". By analyzing the backgrounds, contents and influence of the supervisory polices of each supervisory phase, the Paper indicates the character of inconsistent supervisory policies. In the end, the author boldly anticipates a dismal prospect of offshore listing of Chinese enterprises by virtue of SPVs, followed by some suggestions to the supervision of SPVs.