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发帖数: 6643 | 1 百度，新浪，搜狐等等， 都是 VIE， 啥叫 VIE？
VIEs In China. The End Of A Flawed Strategy.
By Dan Harris on October 10th, 2011 Posted in China Business, Legal News
By: Steve Dickinson
China continues to bar foreigners from ownership those sectors of the
economy China considers particularly sensitive from the standpoint of
national security. The Internet is one such sector where direct foreign
ownership is prohibited. Yet it is well known that virtually the entire
Internet sector has been funded by foreign IPOs, making foreign investors
the owners of this sensitive sector in violation of the of the law. New
regulations recently promulgated by MOFCOM (China’s Ministry of Commerce)
appear to have ended this unusual situation.
Foreign companies have managed to “own” companies in China’s Internet
sector by using what is known in the United States as a Variable Interest
Entity (“VIE”). Under a VIE structure, a Chinese Internet provider is
effectively owned by a foreign entity through a complex set of contractual
arrangements, rather than through ownership of stock. The control by the
foreign entity is so total and complete that the arrangement is considered
the equivalent of ownership under U.S. accounting rules. However, by there
being no actual foreign ownership of stock, these VIE structures have
managed to operate in China, evading the clear rules restricting foreign
ownership.
New Regulations recently issued by MOFCOM appear to spell the end of VIEs.
On September 1, the Regulation of the Ministry of Commerce on the National
Security Review System for Mergers and Acquisitions of Domestic Enterprises
by Foreign Investors (Regulations) became effective. The Regulations provide
the long-awaited procedures for national security review for foreign
related M&A activity that is required under the recently promulgated PRC
Anti-Monopoly Law. To the surprise of many, the Regulations also took direct
aim at the VIE procedure.
The provisions are deceptively simple. Article 9 of the Regulations provides
that using “contractual controls” to evade the requirements of Chinese
law that would otherwise restrict or prohibit foreign investment in a
sensitive sector is prohibited. This is a clear prohibition against the use
of VIE structures. The whole goal of the use of VIEs is to hide the fact of
foreign investment from the Chinese regulators. Thus, it is likely that the
use of a VIE will not be caught by national security review at the outset of
the investment. To deal with this issue, Article 10 of the Regulations
provides that where such contractual controls are used but not reported to
the Chinese regulators, the parties involved have the independent duty to
immediately terminate the offending conduct. If the parties do not take
action on their own, the regulators have the authority to order the
immediate termination of the offending investment by whatever means are
necessary.
What does this mean for the future of foreign investment in China? Many
foreign investors contend that existing VIE structures are sound and that
VIE arrangements can safely be used in the future. I disagree.
The following has been occurring of late in the VIE arena:
In the Internet sector, IPOs continue to be proposed that rely
explicitly on a VIE structure. Such IPOs are clearly under a cloud and are
quite properly being delayed or cancelled.
Many investors have proposed expanding the VIE structure for foreign
IPOs in other restricted sectors of the Chinese economy, such as the telecom
and medical services sector. It is now clear that this proposed expanded
use of the of the VIE structure in China will not succeed.
The new regulations only reaffirm that existing foreign investment in
the Internet sector is built on a shaky foundation and the that the Chinese
regulators are essentially only one phone call away from steppng in and
ordering all of these investments be terminated. Even if the Chinese
regulators doe not take this drastic step, it is now clear that the
contractual arrangements on which the various VIEs are based are in clear
violation of Chinese law. This renders the contracts unenforceable and makes
existing VIE structures essentially meaningless.
None of this is actually new. These risks have long been known. However, the
clarity of the Regulations means it is now nearly impossible to claim that
Chinese law on these issues is ambiguous or unclear. Where Chinese law says
that ownership by foreigners is restricted or prohibited, the law means what
it says. Foreigners who invest in violation of the law are making a bet
that the violation will be ignored. This is extremely unlikely in today’s
China. Such bets are sucker’s bets and should avoided at all costs.
We have been speaking out against VIEs for years and just about every time
we do so, someone says that if they are illegal, why have so many large law
firms, large accounting firms, and large companies gone along with them? The
answer is simple. Money. Big money. Really big money. Now, some of these
same law firms and accounting firms and companies are denying that anything
has changed. And why is that? Again, money. Only this time they are taking
positions not so much to make more money going forward, but to avoid losing
through lawsuits the money they have already made.
We have written extensively on the perils of VIEs and if you want to read
more, I urge you to check out the following:
China VIE Structures, The Podcast. Money….So Money
Who Owns China’s Internet? Why Even Ask That?
Crouching Tiger, Hidden Fraud. Clear Speaking On VIEs.
China Law: Don’t Blame It On The Gray.
Gigamedia And The Perils Of VIEs. Dude, Where’s My Chop?
China. Where Everything Is Local. Until It’s Not.
Variable Interest Entities (VIE) In China. What Would The Buddha (Steel)
Say?
What do you think? |
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