Reading the Tea Leaves: What is Really Happening with VIEs in China
VIEs are currently used by dozens of listed companies, including high profile issuers such as Baidu, NetEase, Tencent, Youku, Sina and SOHU, and numerous private equity-backed portfolio companies in industries ranging from internet to dredging. In recent months, however, confusing signals from the governmental authorities in Beijing, coupled with negative press and aggressive trading by short sellers, have created unprecedented attention and uncertainty surrounding this uniquely Chinese investment structure.
In this presentation, we look beyond the media hype to review:
• the origins of the VIE structure and how the PRC government has addressed it over the years
• recent government actions and how they can be expected to shape future policy making
• how routine real life problems, such as divorce and employee disputes, have had a very real impact on VIEs in the market
• best practices for implementing VIEs in the current environment and planning for contingencies in case VIE usage is limited or prohibited in the future
Seasoned private equity and capital markets lawyers who have been working with VIEs since their very inception in 2000 will discuss these developments and what private equity sponsors and underwriter banks can do to minimize their risk.