| The Chinese Internet industry has developed rapidly since2000. Many great internet companies have sprung up during that time, such as Sina, Netease and Sohu, which promote the soaring of information industry. The reasons are that these domestic enterprises go for offshore listing through VIE mode, and then raise funds to support themselves. However, the incident that Jack Ma transferred all the equity of Alipay and then unilaterally terminated the agreement of VIE was a fatal damage to the other shareholders (Yahoo and Softbank), which also made the default risk of VIE mode obvious. The following cases of CAST-US and EDU added to the overseas investors’ distrusts to the VIE mode listing enterprises from China. The default risk was used as weapons to attack these companies from China by some short-sellers like Muddy Waters Research and Citron Research.This thesis consists of four parts. The first part is a case-study of the Alipay. A preliminary analysis on the default risk of VIE mode would be done after introducing the whole story of the incident. The second part is an overview of VIE mode including comparing the concept of VIE to others related to the offshore listing, reviewing the two typical phase of VIE mode of Chinese enterprises and analyzing the existence value of VIE mode. The third part comes to the basic structure of VIE mode and the legal nature as well as the legal effects of the contracts under VIE mode. The fourth part is to analyze the default risk of VIE mode and explore the solutions from the perspectives of corporate governance and content of contracts.Based on the case-study of Alipay, the thesis analyzes the default risk of VIE mode which seems to be inevitable, and then give some pragmatic improvement suggestions to better this mode. The purpose is to reduce risk in order to win more confidence from overseas investors, and ultimately beneficial to the Chinese enterprises who choose VIE mode for offshore listing. This is also the possible innovations of the studies. |
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