- Decisions against VIE-related contracts in
China’s highest court and arbitration commission
create even greater uncertainty for the
structure’s legal status;
- The VIE may be legal, but it doesn’t
seem that it is enforceable in Chinese courts;
- A bilateral investment treaty between China and
the US would help, but the best solution would be for China
to relax its foreign investment rules to focus on foreign
control rather than foreign investment.
The legality of variable interest entities (VIEs)
in China is even more uncertain following unfavourable rulings in China’s highest
court and a tribunal of the Chinese International Economic and
Trade Arbitration Commission (CIETAC) Shanghai.
The structure has is also encountering uncertainty in the
US, with the Securities & Exchange Commission (SEC)
investigating US-listed Chinese companies that...