Research On The Legal Issues Of Dismantling The Control Structure Of The VIE Agreement

VIE structures has promote the rapid rise of Chinese Internet companies and brought the golden decade of TMT industry development.However,the legitimacy of VIE is questionable without any corresponding policies and regulations.Along with the change of the securities supervision system and market environment,some enterprises who have set up the VIE structures began to dismantle it in order to go public in the domestic capital market and obtain the high valuation system and abundant liquidity of the market.Some enterprises suspended or terminated the trading of dismantle in the face of the change of regulation.Those spontaneous dismantling and stopping of dismantling behaviors prove that the regulatory system can make great effects on the decision of going public and financing arrangement of those VIE companiesOnly fully understand the legal problems in the process of removing the VIE structure can the enterprises make better decision of whether dismantling or not.For regulators,the research on legal problems of dismantling the VIE structure can help it judge whether the regulation can effectively protect investors,maintain the fairness,efficiency and transparency of the market and avoid to cause systemic risk.The regulations on dismantling of VIE structure include foreign exchange,tax revenue and securities,which have important influence on the choice of places and methods of the listing of domestic enterprises.A large number of regular or irregular market practices can also reform and perfect the regulatory policy in a sense.Therefore,the choices of enterprise and related regulatory policy,attitude and opinion have reference value and significance of research.On the one hand,this paper try to analyzing the process of dismantling VIE structure and summarize the effective path of dismantling for enterprises deciding whether dismantling or not and the way to dismantling.On the other hand,this paper will analyze the legitimacy and rationality of current regulatory policy and the enterprise's practice in the face of those policies to provide reference for how regulators dealing with the VIE structure.This paper adopts the research methods including normative analysis,case analysis and comparative research,bases on the current effective laws and regulations system including securities,foreign exchange and tax and discusses the policy changes and the impact on the dismantling.At the same time,this paper summarizes and analysis the legal problems caused by the policy change and try to parse then from the theory research and outside experience view.The main body divided into four parts.First,it clear the related concepts,the general steps,background and the status quo of dismantling the VIE structure.And it summarizes the main legal obstacles are the following: the tightening of outflow of foreign exchange policy makes the capital outflow difficult when dismantling;the change of anti-avoidance mentality enhance the enterprise tax costs;the unclear regulation attitude and strict regulation require make it uncertain on the success of going public.Then,the paper analysis from foreign exchange,taxation and securities aspects to expect more convenience can be provided for free trade.