Rumor: CSRC Requests State Council Ban VIEs
Sina Tech, 9/19/11
Four law firms in mainland China and Hong Kong have told Reuters that the China Securities Regulatory Commission (CSRC) has issued an internal document proposing the State Council prohibit variable-interest entities (VIE).
While CSRC declined to comment on the rumors, the law firms said that the CSRC is serious about the matter and that if accepted by the State Council, the ban could have severe consequences for Chinese enterprises' ability to list overseas and obtain foreign investment.
According to the law firms, the CSRC is pushing for the Ministry of Commerce to oversee the changes since all new VIEs must be approved by the Ministry. The changes would not call for the dismantling of existing VIEs.
The document does not bear the CSRC letterhead nor does it specify its recipient, but all four firms said it was intended for the State Council.
According to China internet industry analyst and former Yahoo China president Xie Wen, State Council Vice Premier Wang Qishan has previously stated that the government should recognize the legitimacy of VIEs and regulate them. Xie said the Ministry of Commerce has already issued statements to this effect, and it is highly unlikely that VIEs will be banned.
Editor's Note: For more information on this topic, please see "MOFCOM Issues New Rules on Foreign Investment," MD 9/05/11 issue.
Keywords: Wang Qishan listing IPO Xie Wen foreign investment Internet law Ministry of Commerce State Council CSRC regulation
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