Research On The Legal Risks And Preventive Countermeasures Of Red Chip Enterprises Returning

In order to avoid the strict domestic policy supervision,state-owned enterprises and private enterprises with early maturity and strong financing demand have gone to Hong-Kong and the United States through equity control or agreement control.In the perfect capital markets with rich investment experience,they raised enterprise transformation expansion of the first pot of gold successfully,and created a group of outstanding enterprises,represented by Baidu and Sina.With the increasing international influence of Chinese enterprises listed overseas,they have become a force that cannot be ignored in the capital market.Red-Chip Enterprises emerge at the historic moment.However,the good times did not last long.In 2008,the financial storm swept the whole world,the overseas investment environment deteriorated,and the capital market supervision became stricter.The red-chip enterprises that were unacceptable were repeatedly fell into regulatory dilemma because of information asymmetry;Muddy Waters Research,Citron Research,and other short institutions took the opportunity to launch an attack,collecting unfounded information to produce and issue a short-position reports,causing market panic.Because of the information asymmetry,insufficient communication and other bad news,the company’s stock price dropped dramatically,the market value shrank sharply.The Alipay fiasco triggered a trust crisis,leading Red-chip enterprises into embarrassment.At the same time,favorable policies are frequently issued in china to call for the return of high-quality red-chip enterprises,For example,the Catalogue for the Guidance of Foreign Investment Industries,has been revised again and again,and the positive list has been transformed into the negative list,in which the number of industrial restrictions has been reduced again and again;and accelerating the establishment process of the science and technology innovation board,and trial registration-based IPO mechanism.The aim is creating a landing point for the red-chip enterprise to return.the MSCI index and the FTSE Russell index have been included into A-shares;the Shanghai-Shenzhen-Hong Kong Stock Connect has been operating normally;the Shanghai-London Stock Connect has been steadily advance.IPO review gives the green light to unicorn enterprises which are in new industries,new business forms,new technologies and new modes,constantly refreshing the review speed,promoting the optimization and upgrading of industrial structure.Customized CDRmode for large-scale red-chip enterprises,can reduce regression risks and operating costs,which creates more convenient conditions for the return of red-chip enterprises.Under the contrast of the domestic and overseas investment environment,the returning of red-chip enterprises is the trend of times.But the road to return is not always smooth,whether the repurchases of shares,the clearing of overseas investor,the release of agreement,and the preparing of domestic listing,are related to multi-party interest and coordination of articles of law between two market.Improper handling may face legal risks,such as class actions,tax compliance review,and IPO review time extension.However,the issue that the return of the red-chip enterprises which aroused people’s extensive attentions after launched by Stormwind Technology in the GEM in2015.Because of a little experiences and varies widely situation in each enterprise,the difficulty of the regression operation was imaginable.After objectively analyzing the various reasons for the motivation of the red-chip enterprises,the paper first divides the regression operation process into three stages:privatization delisting,demolition of red-chip structure and domestic listing,Second,combine the typical cases to sort out the high-level legal risks of each stage.Finally,from the perspective of the enterprise,and the government,the paper proposes the risk prevention countermeasures and the conception of system improvement which provide reference for the enterprises preparing to return and improve the success rate.