![]() ![]() WHY DO CHINESE COMPANIES USE THE VIE STRUCTURE? “This structure is designed for companies in industries where China will issue an operating license only to local Chinese companies such as the internet, education, data centers and media industry,” the Jefferies analysts said. The offshore company enters into a series of contracts with the owner(s) of the local Chinese company, which operates the business in China, to obtain 100% economic interest in that business, Jefferies analysts wrote on Thursday. This advertisement has not loaded yet, but your article continues below. In a VIE, a Chinese company sets up an offshore company for overseas listing purposes that allows foreign investors to buy into the stock. The VIE structure was created two decades ago to help skirt Chinese rules restricting foreign investment in a number of sensitive industries such as media and telecommunications. Here are answers to some key questions concerning VIE: The VIE structure has allowed dozens of the country’s blue-chip companies to list overseas. The China Securities Regulatory Commission’s (CSRC) team will mainly sharpen its focus of companies seeking to list overseas using a structures known as Variable Interest Entities (VIEs), three people with knowledge of the matter said. auditing rules.China’s securities regulator is setting up a team to review plans by Chinese companies for initial public offerings (IPOs) abroad, sources with knowledge of the matter said, including those using a corporate structure which Beijing says has led to abuse.Ĭhinese companies looking to list offshore will also need approval from the relevant ministry, the sources told Reuters, in a break from a decades-old arrangement that did not require them to seek a formal go-ahead from any authorities in China. regulations being rolled out that could see Chinese companies delisted if they do not comply with U.S. regulators will potentially gain more access to audit documents of New York-listed Chinese companies.Īnalysts also note the tougher stance coincides with new U.S. listing plans and opt for Hong Kong instead, with one source at the time citing Beijing's concerns that U.S. In May, Reuters reported that Beijing was pressing audio platform Ximalaya to drop U.S. The tougher stance by the Cybersecurity Administration of China has been driven in part by concerns that the United States could gain greater access to data owned by Chinese firms - similar to concerns that the previous Trump administration had voiced about Chinese firms operating in the United States. later this year, a review of the filings showed. ![]() listings, Refinitiv data shows, well up from the $1.9 billion from 14 deals in the same period a year ago.Įight Chinese companies including home service platform Daojia Ltd and Atour Lifestyle Holdings have made public filings with the Securities and Exchange Commission (SEC) to list in the U.S. So far this year, a record $12.5 billion by Chinese firms has been raised from 34 U.S. capital markets have been a lucrative source of funding for Chinese firms in the past decade, especially for technology companies looking to benchmark their valuations against listed peers there and tap an abundant liquidity pool. Morgan Stanley, Bank of America, and China International Capital Corp Ltd (CICC) were the investment banks on the deal and all declined to comment to Reuters. LinkDoc did not immediately respond to a request for comment. The sources declined to be identified as the information has not yet been made public. The book closed one day earlier than planned on Wednesday, one of the three sources and a separate person said. It had planned to sell 10.8 million shares between $17.50 and $19.50 each. ![]() and make it more difficult to raise funds overseas," he said.īacked by Alibaba Health Information Technology Ltd, LinkDoc filed for its IPO last month and was due to price its shares after the U.S. "The new rules may impose long waiting periods on any companies hoping to list abroad which will hit investor sentiment, depress valuations for IPOs in the U.S. listing, they may have to wait for further clarification, stricter scrutiny and pre-approval from different regulators and authorities," said Bruce Pang, macro & strategy research head at China Renaissance Securities. ![]()
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