Reasearch On Legal Issues In Relation To"Contract Control+VIE" Structure

On September23,2014, a made-in-china e-commerce giant ALIBABA launchedits IPO on the capital market of New York in the United States, which drawn theattention of the global investors, as well as the high enthusiasm of the Americanmedia. When MA Yun gave speeches in front of the media, while enjoying the feelingof a movie star, the finance professionals, at the same time however, are on the otherside to say something different to the media. Just a few days before the IPO ofALIBABA, the US China Economic and Security Review Commission (USCC), anorganization monitoring the effects of US-China trade to the economy and security ofthe United States, reported a warning notice of “Away From ALIBABA” to theinvestors, according to which there is “significant risk” to ALIBABA, Baidu, Sina andsome other Chinese companies listed in the United States, involving the internetinformation, e-commerce, media, publication, education and training as well as someother industries. All these companies have a same structure known as “contractcontrol+VIE”.This paper constitutes of five chapters as follows:Chapter I is a general introduction to the "contract control+VIE" struture, whichincludes a systematic introduction of the concept, the characteristics, the history andthe improvement of the "contract control+VIE" structure. This paper collected some onshore and offshore cases, documents and works, by combing and analyzing thesame, worked out a general definition of the "contract control+VIE" structure.Chapter II is the analysis to the “contract control+VIE” structure, with theintroduction of all the relevant agreement used under the “contract control+VIE”structure, the logical relationship in and between these agreement, as well as theanalysis to the recent updates to the “contract control+VIE" structure.Chapter III discuss the application of the “contract control+VIE” structure,which is the focus of this paper and is in relation to the application of the “contractcontrol+VIE” structure in the finance aspects. In the aspect of merger and acquisitionwith foreign capital, it covers general review, anti-monopoly review, security review.In the aspect of corporate governance, it covers the affects to the company by itsfunders or sponsors, shareholders meetings, board of directors. It also analyze theforeign exchange control, which is key issue usually decides the success of thestructure. In this aspect, it covers foreign exchange registration and onshore andoffshore foreign exchange settlement.Chapter IV is the legality and risk analysis of the “contract control+VIE”structure, which is a theoretical analysis part in this paper. The legality analysisfocuses on the jurisprudence and economic law aspects while the risk analysis focuseson the most generally accepted views, together with the point of view of the author.Chapter V is the attitude and advice to the “contract control+VIE” structure,with the comparison of different current views as well as the advice of the author.