The Associated Press (Shanghai, editor Shi Zhengcheng), on Friday, local time, US SEC Chairman Gary Gensler (Gary Gensler) issued a statement on the issue of the VIE structure of Chinese concept stocks applying for listing in the United States. The latest guidelines.
(Source: U.S. SEC) The full name of the VIE structure is a variable interest entity. In terms of specific operations, the company to be listed is registered overseas (Cayman Islands, etc.) as a listed entity, and controls domestic business entities through agreement. Most Chinese investors are familiar with Internet giants. Most of them use this structure to list in the United States.
Gensler stated in the statement that for overseas “shell companies” and investors who purchase shares of “shell companies”, they do not actually own the stocks of the corresponding domestic operating companies, and it may be difficult for ordinary investors to realize this. . In the face of this situation, the US SEC will require these offshore issuers to make clear disclosures before the IPO registration statement is confirmed to be valid:
1. The investor purchased a “shell company” instead of an operating entity, and a clear distinction should be made between the “shell company” and the operating entity in terms of specific business descriptions;
2. Whether there is uncertainty in the financial performance of the operating entity and the control agreement;
3. Financial information including quantitative indicators so that investors can understand the financial relationship between the VIE and the issuer.
In addition to his concern about the VIE structure, Gensler also talked about the Chinese regulatory authorities’ approval requirements for the overseas listing of Chinese concept stocks in the statement, stating that relevant listed companies are obliged to disclose the approval status when applying for registration with the US SEC.
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