The Red-chip Mode Protocol Control And Analysis Methods And The Legal Risk

China’s internet industry has been growing up vigorously since2000and a large number of industry-leading enterprises were born, which greatly promote prosperity of our country’s internet and information industry and which are largely benefited from developing capital raised overseas through Contractual Control adopted by internet industry. However, Contractual Control faces serious challenge as a result of Mayun’s unilateral termination of Contractual Control in Alipay in early2011and internal report of China Securities Regulatory Commission spread on media in September2011. Different parties hold different views on whether Contractual Control shall survive or be canceled. This essay systematically analyzes Contractual Control purporting to prioritize the current argument on its existence or cancellation. This essay is composed of four chapters. The first chapter is an overview Contractual Control including clarifying concept of Contractual Control firstly; then discussing the source, development and current situation of Contractual Control; analyzing value and function of Contractual Control thereafter. The second chapter analyzes legal risks existed in Contractual Control completely and detailedly from viewpoints of financing enterprises, investors and host countries. The third chapter deeply analyzes reasons for legal risks existed in Contractual Control from restrictions on industry entrance, legal policies and the Contractual Control. The fourth chapter proposes feasible methods to overcome legal risks in Contractual Control from standing of supervisory department and financing enterprises.This essay aims to deeply analyze legal risks in Contractual Control, the reasons thereof and proposes feasible solutions correspondingly. Those solutions not only emphasize the supervisory requirements arising out of national economy security and information security, but also take financing and developing requirements of enterprises that foreign capital is forbidden to enter in into consideration, and emphasize the positive effect caused by Contractual Control as well.