Variable Interest Entity Structure as a Form of Investment Undertaken by Chinese Companies on Foreign Stock Exchanges

• Autorzy: Sylwia Cieślik
• Języki publikacji: EN

Abstrakty

EN

The aim of the article: The purpose of this article is to discuss theoretical issues concerning the nature of the Variable Interest Entity (VIE) structure and to analyze the scale and functioning of companies using this structure to issue securities on foreign exchanges. The main research hypothesis was that the VIE structure is widely used by Chinese companies to issue securities on international stock exchanges. Methodology: The basis of the research material are academic articles, reports of institutions and corporations, journal articles and other sources, as well as statistical data of companies collected on stock exchanges. Through analysis of stock market data, the authors sought to identify the number of companies operating under the VIE structure and determine the amount of capital invested on the largest international stock exchanges. Results of the research: Empirical research indicates that the VIE structure is used by Chinese companies operating in sectors of the Chinese economy restricted by the authorities in order to issue securities, and thus raise the necessary capital for further development. The results indicate the large amount of accumulated capital, the huge number of entities involved in their operation, as well as the high risk associated with the investment.(original abstract)

Słowa kluczowe

EN

International capital markets; Capital market; Investments; Investment risk

PL

Międzynarodowe rynki kapitałowe; Rynek kapitałowy; Lokaty; Ryzyko inwestycyjne

• Czasopismo: Finanse i Prawo Finansowe
• Rocznik: 2021
• Tom: 3 (31)
• Strony: 7--23

Twórcy

autor

Sylwia Cieślik

• University of Lodz

Bibliografia

• Brown, I.E. (2017). China's leaked CSRC report five years later: Baseline for VIE trajectory? Houston Journal of International Law, 39(1), pp. 197-236.
• Charltons, (2014). Listing PRC Companies in Hong Kong Using VIE Structures https://www.charltonslaw.com/legal/ipo/Listing-PRC-companies-in-Hong-Kong-using-VIE-structures.pdf [Accessed 31.10.2020].
• Coppola, A., Maggiori, M., Neiman, B. and Schreger, J. (2020). Redrawing the Map of Global Capital Flows: The Role of Cross-Border Financing and Tax Havens. Becker Friedman Institute, International Economic Initiative. Working Paper 2019-118, pp. 1-54.
• Deutsche Börse Cash Market (2020). Listed companies in Prime Standard, General Standard and Scale https://www.deutsche-boerse-cash-market.com/dbcm-en/instruments-statistics/statistics/listes-companies [Accessed 31.10.2020].
• FTSE Russell (2018, September 1). Understanding China's Economic and Market Developments: Managing China's Transition Into Global Benchmarks https://content.ftserussell.com/sites/default/files/research/ftse-russell_understanding-china_s-economic-and-market-developments_september-2018_docx.pdf
• Gillis, P.L. (2014). Son of Enron: Investors Weigh the Risks of Chinese Variable Interest Entities. Journal of applied Corporate Finance, 26(3), pp. 61-66.
• Gills, P.L. (2019, March 13). Variable Interest Entities in China, GMT Research Guest Series, 1-2 https://www.chinaaccountingblog.com/weblog/2019-03-vie-gillis.pdf [Accessed 31.10.2020].
• Guo, L. (2014). Chinese Style VIEs: Continuing to Sneak under Smog? Cornell International Law Journal, 47(3), pp. 569-606.
• Hong Kong Exchanges and Clearing Limited (2020). List of H Share Companies https://www.hkex.com.hk/Market-Data/Statistics/Consolidated-Reports/China-Dimension?sc_lang=en&tabName=GEM [Accessed 31.10.2020].
• Larson, M. (2019). Alibaba's VIE structure and erosion of beps goals in China's e-commerce industry. Temple INT'L & Comp. L.J. 33(1), pp. 204-243.
• Latham & Waltkins (2019). China Introduces New Foreign Investment Law, Negative Lists, and Encouraged Industries Catalogue. Client Alert White Paper No. 2531, pp. 1-9 https://www.lw.com/thoughtLeadership/china-introduces-new-foreign-investment-law-negative-lists-and-encouraged-industries-catalogue [Accessed 31.10.2020].
• Lee, R.T. (2011). Understanding the VIE Structure: Necessary elements for success and the legal risks involved. Cadwalader Wickersham & Taft LLP https://www.lexology.com/library/detail.aspx?g=aa820b96-ff4a-4704-b457-243dce432a81 [Accessed 31.10.2020].
• Liu, C. (2018). Chinese offshore IPOs grow more reliant on shaky legal structure. Nikkei Asian Review https://asia.nikkei.com/Business/Markets/Chinese-offshore-IPOs-grow-more-reliant-on-shaky-legal-structure [Accessed 31.10.2020].
• London Stock Exchange (2020). AIM Issuers by country of operation https://www.londonstockexchange.com/reports?tab=aim [Accessed 31.10.2020].
• London Stock Exchange (2020). Issuer list https://www.londonstockexchange.com/reports?tab=issuers [Accessed 31.10.2020].
• Powell, J. (19.10.2019). China VIEs: the scale of exposure. Financial Times https://ftalphaville.ft.com/2019/10/10/1570714343000/China-VIEs--the-scale-of-exposure/
• Schindelheim, D. (2012). Variable interest entity structures in the people's republic of China: Is uncertainty for foreign investors part of China's economic development plan. Cardozo Journal of International and Comparative Law, 21(1), pp. 195-234.
• Shen, W. (2012). Deconstructing the myth of Alipay Drama-Repoliticizing foreign investment in the telecommunications sector in China. Telecommunications Policy, 36, pp. 929-942.
• Shi, S.Y. (2014). Dragon's house of cards: Perils of investing in variable interest entities domiciled in the people's republic of China and listed in the United States. Fordham International Law Journal, 37(4), pp. 1265-1308.
• U.S.-China Economic and Security Review Commission. (2020). Chinese Companies Listed on Major U.S. Stock Exchanges. U.S. Government Publishing Office https://www.uscc.gov/research/Chinese-companies-listed-major-us-stock-exchanges [Accessed 02.10.2020].
• Whitehill, B. (2017). Chinese Companies and the VIE Structure. Council of Institutional Investors https://www.cii.org/files/publications/misc/12_07_17%20Chinese%20Companies%20and%20the%20VIE%20Structure.pdf [Accessed 01.10.2020].

Identyfikatory

DOI

10.18778/2391-6478.3.31.01