TICL_-_VIE_Structures_in_China.pdf

TopicsinChineseLaw AN O’MELVENY MYERS LLP RESEARCH REPORT VIE Structures in China: October 2011 What You Need to Know by David Roberts and Thomas Hall* or more than a decade, the captive As a result, it is more important than For “Sina-model” structure (also ever that investors clearly understand commonly referred to as the “variable how VIE structures work, why they interest entity,” or VIE, structure, which are used, and the risks involved with is the term we use in this article) has investing in a company using a VIE been adopted by foreign-invested PRC structure. In this article, we discuss the companies operating in industries subject basic characteristics and underlying to restrictions on foreign investment. The rationale of the VIE structure, its structure has become commonplace and is expanded use in recent years, the used by many of China’s most well known regulatory history and recent regulatory offshore-listed companies, including scrutiny of the structure, the structural Alibaba, Baidu, Dangdang, Focus Media, risks inherent in its use and best