Legal Regulation Of VIE Structure

Building VIE structure is one of the main ways for Chinese enterprises to list abroad.VIE structure uses VIE rules to achieve the function of consolidated financial statements,and uses the way of agreemental control to formulate the equity control of domestic operating entities.In addition to the avoidance of foreign investment access,the avoidance of approval of foreign M&A and strategic choice of listing location are all the reasons for enterprises to seek overseas listing by using VIE structure.The legal regulation of VIE structure has its legitimacy basis.At present,the VIE structure has brought adverse effects on China's national security,market order,the interests of VIE structure enterprises and investors,but without the intervention of legal regulations,it is difficult to eliminate these negative effects.As for the regulation direction of VIE structure,"silence has adverse effect;negation has greater adverse effect".In view of the strong social needs behind the VIE structure,the effectiveness of VIE structure should not be denied;and the theory of rights requires that legal regulations should adapt to the development of society and economy,and solve the new conflicts brought by VIE structure;in the perspective of corporate governance,for the conflicts caused by VIE agreement,we should provide relief and recover losses for the subjects whose interests are damaged on the basis of maintaining the transaction results as much as possible.However,it is not appropriate to deny the judgment of the effectiveness of VIE structure,which will not change the VIE structure itself from"hidden rules" to "explicit rules".Therefore,after responding to the reasonable social needs behind the VIE structure,we should fill in the legal loopholes of VIE structure.The legal regulation practice of VIE structure in China can be divided into legislative regulation,law enforcement regulation and judicial regulation.The legislative regulation of VIE structure in China can be summarized into five aspects:foreign investment access,national security review,overseas investment and financing approval,information report and information disclosure.The specific performance of China's VIE structure law enforcement regulation is the overall silence and selective negation of individual cases,which reflects the characteristics of strong selectivity.The judicial regulation of VIE structure in China is characterized by lack of initiative.Under the guidance of the direction of VIE structure regulation and on the basis of the investigation of legal regulation practice,this paper puts forward some thoughts and suggestions on improving the legal regulation of VIE structure in China:first,we should eliminate the negative impact of VIE structure by improving the national security review system,information reporting system,information disclosure system,enhancing the uniformity and predictability of law enforcement,and better playing the role of judicial regulation Second,to create a "de VIE structure" institutional environment by making the our securities capital market better and providing support for the VIE structure to return to China;third,to fill the legal loopholes in the VIE structure by improving the criteria for determining foreign investment and confirming the effectiveness of the existing VIE structure.