The Red-chip Listing By Offshore Company

The Red Chip mode means a arrangement of company structure and legal entitiesthrough which the local companies of China main land can go public in the foreignstock market through using a offshore company established in famous tax heavenaround the world.The local company will firstly establish a offshore company in a taxheaven.Then，they will seek for funds into the offshore company to purchase theassets of the local companies.After the benefits of the local companies transferred intothe offshore company through M&A，then they will operate the offhosre company togo public in a foreign market.By doing so，the local company could fulfill their aim ofgetting funds from foreign stock market to support the development of the localcompany and even the whole industries.The process of go public with Red Chip mode has already experienced fourprogressing stages，which can be concluded as the initial explosive stage，fastdevelopment stage, mature stage and has obtained huge progress in overallquantities，location spread as well as kinds of industries,etc.However,there have someproblems when the mode is employed and the mode has brought negative influencesfor the country’s economic safety.It’s meaningful to realize these problems,and toexplore how the mode develops the next step under the regulations.This essay will explore the supervision of the Red Chip Mode in China fromlegal perspective.The author discusses the concept and history of Red Chip Mode forclarifying the concept of Red Chip,making a thorough exploration of the steps andprocess of Red Chip operation,carrying out a detailed discussion on the regulationsand law in China that forms the rule of supervision of Red Chip.The articles ofregulations and main statutes will be researched and the analysis will be delivered onthe theory and effects of these regulations.The author will try to locate someimperfections and defects of the legal system and look into the distance.