The Control Mode Study Of Overseas Listed In The Agreement

Although China has already been a member of World Trade Organization for almost ten years, she is still a country that restricts or even forbids foreigners from investing industries like education, film-making, real estate, news website, network audiovisual service. Because of the financial crisis which led to assets substantial shrinking, the Restricted Foreign Investment Industries become the first choice for foreign investors undoubtedly. At the meantime, with the economic globalization, more and more domestic-funded companies are seeking for Initial Public Offering in the oversea capital market.The way of issuing oversea shall be classified into directly listing abroad and indirectly listing abroad. The former refers to the way in which the domestic stock company issues stock (or other financial derivatives) abroad in the name of itself. The latter refers to the procedure that a domestic-funded enterprise seeks for capital raising in the oversea market in the name of a special purpose company, an overseas enterprise directly established or indirectly controlled by a domestic resident legal person or domestic resident natural person for the purpose of engaging in stock right financing (including convertible bond financing) abroad with the enterprise assets or interests within the territory of China. The VIE model is a way of indirectly listing abroad.The VIE model shall settle the double puzzle plights of foreign investors and domestic-funded companies. The domestic-funded companies which engaged in the Restricted or Prohibited Catalogues shall complete the introduction of foreign strategic investors and overseas financing with the VIE model while the foreign investors shall enter into the Restricted or Prohibited Catalogues with the VIE model.Whereas, the VIE model shall escape the legal observation and result in the situation of Tax Avoidance, Tax Evasion, Money laundering, Capital Loss and so on. These may possibly damage the existing national property and Financial Security System. Therefore, this paper will focus on the VIE model selected by domestic-funded companies for Initial Public Offering in the oversea capital market. In this paper, I will analyze the concept and the factual reason of the formation of the Red Chip Listing Mode, and in multiple perspectives access the inefficiency and the fractures of the observation system of the VIE model of Red Chip listing, then provide a few improvement ideas.