The Legality And The Possible Future Legal Development Of The VIE Structure

The inconvenience of financing in domestic capital market and the restriction of foreign investment's access to certain industries have given rise to the upsurge of domestic enterprises5 IPO overseas by using VIE structure.However,VIE structure has been in a gray area in our country where its effectiveness has never been clearly identified.With the rapid development of capital market,laws and regulations are improved day by day,it is of great significance to study the effectiveness and the future of VIE structure under the background of the promulgation of the Foreign Investment Law(Draft).This article has been divided into four chapters.The first chapter is an overview of VIE structure.It shows the concept,reasons,development process and risks of VIE structure.It also shows the building steps of VIE structure by illustration.The second chapter focuses on the legal effectiveness of VIE structure.It fully demonstrates the effectiveness of VIE structure from the perspective of theory and practice.By summarizing cases in practice,we find the conflicts between judicial and administrative regulations.The third chapter summarizes domestic laws and regulations of VIE structure in tabular form.Moreover,it emphatically analyses the influence of the Foreign Investment Law(Draft)on VIE structure,including the concept of "control",the negative list model,the national security review system and the information reporting system.Based on the analysis of the development of VIE structure,the fourth chapter points out the future of VIE structure is returning to the domestic capital market and gradually explains the demolishing operation of VIE structure.By introducing typical cases in capital market,this chapter shows the return of VIE structure to domestic A-share market and the new OTC market intuitivelyThrough research on theory and practice,this article finds that the legality of VIE structure still has great uncertainty and the conflict between judicial regulation and administrative regulation has not been eliminated.The courts leave room for the administrative enforcement of the administrative departments when making some judgments on the structure of VIE.The administrative departments,on the other hand,adopt more specific regulatory measures based on the current market and industry.As the supervision of foreign investment in our country is growing more and more open,space for evading regulatory profits will gradually decrease.Back to domestic capital market may become an important choice for many companies of Chinese concept share.In A-share market,IPO,M&A and major asset restructuring all have successful precedents.In the new OTC market,listing or becoming controlling shareholders of other listed companies will also be considered.Enterprises of VIE structure should examine macro-economic conditions,relevant trends of industry and their own characteristics to make appropriate choice.