Study Of The VIE Structure

Since the venture investment industry is still in the development stage and otherfinancing channels are narrow, many emerging industries have to seek the fund supplyby oversea listings when facing dramatic expanding of the market and their ownneeds. Because the direct overseas listing is easy to fail because of the strict controland surveillance, the VIE structure is becoming the top choice for many enterprises.VIE, a widely-used corporate structure, means that the overseas listing partyconcludes the certain contractual relationship with the domestic management party inorder to have the real control over the management party, and by consolidating thetwo parties’ financial statement together to meet the requirements of the listing hostcountry’s accounting standard.In the last few years, because of the happening of the Alipay fiasco and the affairof New Oriental’s share-exchanges, the VIE structure is becoming a sensitive word.The investment bank world and the legal universe concern the uncertainty of the VIEstructure’s future and continually research the risk system of it and conjecture its trendof existence. Whether the VIE structure would exist in the future depends on theattitude of the policy makers. This article is trying to analyze the VIE structure’sdetailed infrastructure mode and characteristics based on the current policy system, and to discuss the real risk and regulatory system of the VIE structure in order to clearits current development situation.In this article, due to the VIE structure’s development and certain issueshappening, I firstly outline and clarify the VIE structure with related concepts andhistorical events, summarizes the VIE mode’s development in our country; secondly,in order to address the VIE issues and find problems from the existing cases, Iillustrate the VIE structure from the legal risks and the market point with a detailedanalysis; finally, with explanations the relevant legal and regulatory system appliedon the structure, I conduct detailed description of the VIE structure and put forwardsome opinions and suggestions. I think it still have to depend on greater efforts to getrid of unreasonable access restrictions for solving the VIE problem but no one wouldhave an answer to the question that how long the process will last. I will give myopinions about how to find a solution in the contexts under the current legal system,but it is better to help the lawmakers clear about the current situations and ask formore reforms.