Legal Analysis Of The Way Out For VIE Structure Enterprises

VIE was born in the US after Enron Event. The new accounting standards require that the VIE’s financial status should be incorporated into its main beneficiaries’ financial statements to promote the information disclosure and strengthen supervision. VIE mode once was a regulatory tool and then became a tool to avoid the law in China. Its reason is that China’s existing regulatory policies focus on equity control, and have ignored the protocol control. This legal loophole had been used to help domestic enterprises realized overseas listing indirectly. In the past ten years, VIEs had gained unexpected development.Many Internet companies of high quality such as Alibaba listing overseas had caused huge losses. And Alipay Event had greatly damaged the image of overseas-listed Chinese firms. Therefore, it is urgent to strengthen the supervision of VIE structure enterprises. Issued in January 2015, the Foreign Investment Law(draft) puts the protocol control into the regulatory scope and prohibits avoiding industrial policies in any way clearly. At this point, through establishing new VIE structures to evade the relevant provisions of the domestic is unlikely. However, governors in China had taken several beneficial steps to facilitate the return of the VIE structure enterprises, such as actual controller standard, improving the domestic capital market. Although the concrete scheme of existing VIE structure companies has not come on stage, VIE enterprises still should make predictions timely.This paper mainly talks about legal analysis of the way out for VIE structure enterprises and is listed in four chapters.The first chapter explains related basic connotation about VIE structure, including basic concept, origin, how to establish and its features. In the second quarter, the paper emphatically illustrates the legal issues involved in VIE structure. Further more, the third section sums up the VIE structure enterprises’ development in the recent years, which raises the theme of this paper. The second chapter accounts for legal factors which may affect the way out for VIE structure enterprises. The third chapter analyzes the preservation of the VIE structure enterprises. Main points are the reasons of retention, the categories of VIE structure enterprises to be reserved and the new way to keep the structure. The fourth chapter analyzes the type of VIE structure enterprises that need to dismantle, starting from the process of demolition, dividing into path choice, delisting, the termination of VIE agreements, equity incentive program, merger and acquisition, and listing several parts.Through the introduction of the basic connotation of VIE structure, this article illustrates the recent law information related to VIE structure enterprises, explains the likely way out for different kinds of VIEs, and discusses the legal problems involved in order to explore the path for existing VIE structure’s future development.