Legally ambiguous ‘VIE’ structure means foreign investors don’t technically own overseas-listed Chinese stocks – and that could spell disaster

//Legally ambiguous ‘VIE’ structure means foreign investors don’t technically own overseas-listed Chinese stocks – and that could spell disaster

Legally ambiguous ‘VIE’ structure means foreign investors don’t technically own overseas-listed Chinese stocks – and that could spell disaster

As China reasserts control over its powerful private enterprises, US and Hong Kong investors in Chinese stocks need to be aware of a rarely discussed risk that has the potential to jeopardise their holdings: the fact that they do not technically own the companies.To skirt China’s restrictions on foreign investment in certain industries and to raise capital from overseas stock markets, many Chinese companies adopted a so-called VIE structure, short for “variable interest entity”. By one estimate…

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By | 2020-12-20T23:30:06+00:00 December 20th, 2020|Business|Comments Off on Legally ambiguous ‘VIE’ structure means foreign investors don’t technically own overseas-listed Chinese stocks – and that could spell disaster