Chinese Securities Regulator in Discussions Over VIEs with Hong Kong Watchdog, Financial Firms

Morrison & Foerster partner and global chair of the Private Equity Group, Marcia Ellis, is quoted in an article, “Chinese securities regulator in discussions over VIEs with Hong Kong watchdog, financial firms,” published by the South China Morning Post (SCMP) on December 3, 2021.

According to three separate sources at the SCMP, the China Securities Regulatory Commission has met with the city’s Securities and Futures Commission, leading investment bankers, accountants, and lawyers to discuss variable interest equity (VIE) structure over the past few months.

Marcia stated that she believes the Chinese government is unlikely to impose a sudden ban on all overseas listings of companies that use the VIE structure. She also said that data will be a key issue when it comes to VIE listings. “The most recent draft regulations released by the Cyberspace Administration of China make this clear. The focus on data-based reviews will allow the government to take a more selective and nuanced approach to approving or disapproving listings,” she explained. 

She expects that Hong Kong will remain a hub for mainland Chinese firms looking to list VIE structures in markets. “Many China-headquartered companies will be focusing on listing or relisting in Hong Kong and other markets such as Shanghai and Shenzhen, not just because of the VIE issue but because the U.S. has frankly become a very inhospitable market for these companies,” she concluded. 

Read the full article.