Research On Validity Of The Vie Agreement

Domestic operators and the foreign investors take advantage of the different legal and accounting system, through the overseas registered within the territory of listed entities and business operation entity to sign a series of agreements, make foreign registration of listed entities and business operation entity within the territory separated, bypassing the regulatory requirements of national regulators, domestic business entities can achieve financing, foreign investors can implement indirect control of the domestic enterprises. A series of agreements signed in such a case, is called the VIE agreements. VIE protocol is the core of the VIE structure, and its essence is through an enterprise contract rather than ownership of another enterprise, in the form of indirect control.VIE agreement as the core of control mode, started in 2000, sina listed, then be copied by a large number of enterprises in our country, mainly used in TMT(technology/media/telecom) and other innovative, growth areas. With the rapid development of China’s Internet industry, electricity industry, the VIE agreements as the core of the protocol control mode for China there has an outstanding contribution, there is no denying the fact. However, based on the conflict between the VIE agreements and the existing laws and regulations, adding the silence of regulators, the effectiveness of the VIE agreements keeps in controversial for a long time. As a result, the effectiveness of the VIE agreements is in fact "naked", with high legal risk.The author believes that the validity of VIE agreements, the core is whether VIE agreement is valid, whether VIE agreement shall be effective and what factors affect the validity VIE agreements. In order to fully clarify the three questions above, this article intends to proceed from seven parts:The first part, mainly from the reality, elaborate practical difficulties faced VIE agreements, leading to writing background, writing theme.The second part, mainly introduce the basic knowledge of the VIE agreements, including the concept and characters of the VIE agreements, the VIE agreements in the status of the protocol control mode, the constitution of the VIE agreements, etc. Clearing the basic knowledge of the VIE agreements, could be helpful for understanding the effectiveness of the VIE agreements.The third part, mainly introduce the background and current situation of the development of the VIE agreements in China. Tell the truth, choosing the VIE agreements is the only way for the operators of the territory of China and the foreign investors. Now, the VIE agreements has a wide range and huge hidden risks, we should solve the problem of the VIE as soon as possible.The fourth part, mainly based on the current laws and regulations, analyze the effectiveness of the VIE agreements. VIE agreements do not violate the mandatory provisions of laws and regulations, and should not be read by "legal forms to cover illegal purposes", but the VIE agreements may be was declared void due to damage the social and public interests.The fifth part, the main theoretical effectiveness VIE agreements were re-analyzed. Based on the discussion of the five value theory and the "principle of proportionality" theory, the effect of VIE agreements should not be all negative, but the scope should be limited.The sixth part, specific measures are put forward to perfect the VIE agreement, Firstly, in the external environment, improve the domestic capital market system, establish a multi-level capital market, widen foreign access channels; Secondly, as for the self-improvement, timely amend the relevant provisions of "VIE" agreement to name, improve the provisions of the contract law about invalid contract, improve the operability of civil legislation, emphasize the convergence of civil legislation and public law, focusing on information disclosure.The seventh parts, the six parts above are summarized. The author believes that the effectiveness of VIE agreements on legislation should be fully affirmed, but in order to prevent excessive use VIE agreements, it is necessary to limit the scope of VIE agreements, excluding factors to adversely affect the VIE effective.