ChiNext Will Be Open to More Companies in VIE Structure
By Huxiu.com Updated: 2015-01-21 15:49:07

The Ministry of Commerce published the Foreign Investment Law of the People’s Republic of China (exposure draft) on January 19, 2015. The passing of the law will contribute to the integration of the three foreign investment laws (i.e. the Law on Chinese-Foreign Equity Joint Ventures, the Law on Foreign-funded Enterprises and the Law on Sino-Foreign Contractual Joint Ventures), the end of the case-by-case foreign investment review and approval mode and the start of the new era of “limited license + overall report”.
Furthermore, the law will include explicit provisions about Chinese companies’ VIE structure for overseas listing. According to public materials, “VIEs”, which is the abbreviated form of variable interest entities and also known as “protocol control”, refer to actual or potential financial sources in forms of legally operating companies, enterprises or investments; However, their owners do not have the full control power over the VIEs.