Company organisation

China's VIE structure has just become less risky

The vaguer terms of China's new foreign investment law has made it less likely that VIE-structured companies will be regulated by the government - a relief to Alibaba and Tencent.

China is less likely to regulate the variable interest entity VIE structures of internet companies a relief for those that list overseas.

SP Global Ratings revisited the VIE risk of Chinese companies last week, saying that the likelihood of regulatory action against VIE structures had diminished. Thanks to the foreign investment law that China intends to implement at the beginning of next year, companies that want to list abroad will have fewer concerns when forming a VIE structure about accepting foreign investors.

The VIE structure was developed by Chinese lawyers about 20 years ago. With the Chinese government still cautious about foreign investment in internet and...

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