Reconsidering the VIE structure

September 12, 2012 | BY

clpstaff &clp articles

The variable interest equity (VIE) structure has long been used by foreign investors wishing to invest in China's prohibited or restricted industries, but an investigation into New Oriental Group has highlighted issues with the structure and led to calls to fully-open foreign investment

Chinese online media company Sina pioneered the trend back in 2000, when it used the VIE structure to list on the New York Stock Exchange. Education company New Oriental Group is one of many Chinese companies since then to have also used the structure to list on international capital markets.

    New Oriental announced it was under investigation by the US Securities and Exchange Commission (SEC) in a press release on July 17. While the company believes that the investigation concerns the consolidation of one its subsidiaries into the company's financial statements, it has not stopped bloggers such as Stan Abrams at China Hearsay and Paul Gillis of China Accounting Blog from speculating that this could be the end of VIEs.


The structure

This premium content is reserved for
China Law & Practice Subscribers.

  • A database of over 3,000 essential documents including key PRC legislation translated into English
  • A choice of newsletters to alert you to changes affecting your business including sector specific updates
  • Premium access to the mobile optimized site for timely analysis that guides you through China's ever-changing business environment
For enterprise-wide or corporate enquiries, please contact our experienced Sales Professionals at +44 (0)203 868 7546 or [email protected]