WILL VIE REALLY FADE?
Written by Raymond Tan 谭伟明
浏览量：2468 / 时间：2018-03-29
浏览量：2468 / 时间：2018-03-29
In the recent months, market players like PE funds and bridge loan providers still have concern over introducing VIE structure in red-chip listing. Some of them look backwards at the dispute with respect to the investment interest in China Minsheng Bank of Chinachem Group (华懋集团), the CIETAC arbitration concerning an online games company and even the spin-off of Alipay from Yahoo. Others might be further frightened by a newly emerged dispute related to Tri-Tech Holding, a Nasdaq-listed company.
Here comes the problem - it is worth worrying about? I intend to say “no” for the time being. Let’s take a quick look at those “bad news”:
(a) In essence, the investment manner under the Chinachem case is much more similar to nominee shareholding than VIE structure, or, in other words, no VIE structure was applied thereto.
(b) Dispute details of the aforesaid CIETAC arbitration have not been disclosed, so nobody other than the legal counsels for the case knows whether it was some poorly drafted language in the relevant VIE agreements that led to CIETAC’s award supporting the invalidity of the relevant VIE structure.
(c) Instead of closing the door for VIE structure applied in online games or other similar sectors, Hong Kong Stock Exchange (“HKEx”) added in the Listing Decision (LD43-3)that where PRC laws specifically disallow foreign investors from using any contractual arrangements to gain control of or operate a foreign restricted business, the legal advisor shall include a positive confirmation in its opinion that the use of VIE Structure does not constitute a breach of the applicable PRC laws or the corresponding VIE agreements will not be deemed invalid or ineffective thereunder. (d) The Alipay Spin-off opens a can of worm that the founder could easily get back the operating assets once he or she breaches the VIE agreements. The “Tri-Tech Holding dispute” seems to get things worse. However, in both cases, it was documentation produced with fraud and/or in undue corporate process that made the transfer of the relevant
Here comes the problem - it is worth worrying about? I intend to say “no” for the time being. Let’s take a quick look at those “bad news”:
(a) In essence, the investment manner under the Chinachem case is much more similar to nominee shareholding than VIE structure, or, in other words, no VIE structure was applied thereto.
(b) Dispute details of the aforesaid CIETAC arbitration have not been disclosed, so nobody other than the legal counsels for the case knows whether it was some poorly drafted language in the relevant VIE agreements that led to CIETAC’s award supporting the invalidity of the relevant VIE structure.
(c) Instead of closing the door for VIE structure applied in online games or other similar sectors, Hong Kong Stock Exchange (“HKEx”) added in the Listing Decision (LD43-3)that where PRC laws specifically disallow foreign investors from using any contractual arrangements to gain control of or operate a foreign restricted business, the legal advisor shall include a positive confirmation in its opinion that the use of VIE Structure does not constitute a breach of the applicable PRC laws or the corresponding VIE agreements will not be deemed invalid or ineffective thereunder. (d) The Alipay Spin-off opens a can of worm that the founder could easily get back the operating assets once he or she breaches the VIE agreements. The “Tri-Tech Holding dispute” seems to get things worse. However, in both cases, it was documentation produced with fraud and/or in undue corporate process that made the transfer of the relevant
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