Department of Commerce to adjust Baidu Ali VIE regulation or deemed domestic

Then “Alipay VIE” was disputed by Ma, many Internet practitioners now or there will be no similar worries. Chinese Commerce Ministry today issued by the People’s Republic of China foreign investment law (draft draft) (hereinafter “the draft”) specification VIE mode control.
So-called variable interest entities, the “VIE architecture”, also known as “Protocol control” for actual or potential sources of economic enterprises have, but corporate entities of interest and not full control over this entity legally operating companies of interest, business or investment.
VIE in China under the laws and regulations in a “gray” area. In March 2013, Baidu CEO Robin Li “to encourage private enterprises listed overseas (VIE) investment qualification of mergers and acquisitions, issuing policy restrictions be lifted” the proposal also sparked heated debate.
Draft provisions on the one hand, foreign control of domestic enterprises with foreign investors, on the provision, foreign investors are controlled by Chinese investors, their investments in China could be China investment.
Opinions specifically mentioned handling protocols control processing for comments draft agreement controlling rule as a form of foreign investment, after the entry into force of this law, by means of contract control investments shall be governed by this law.
Draft investment law existing before the entry into force of the Protocol control approach to investment, such as in the Bill still belongs to the area of prohibitions or restrictions on foreign investment after the entry into force, how to deal with the theorists and practitioners are as follows:
1, the implementation Protocol for control of foreign-invested enterprises, reported to the State Council Department in charge of foreign investment by Chinese investors control may continue to be reserved Protocol control structures and related subjects may continue to operate;
2, the implementation Protocol for control of foreign-invested enterprises, shall apply to the competent Department of foreign investment under its control by actual investors; the State Council Department in charge of foreign investment after found by actual investors control may continue to be reserved Protocol control structures and related subjects may continue to operate;
3, the implementation Protocol for control of foreign-invested enterprises, shall apply to the competent Department of foreign investment under entry, foreign investment jointly with relevant departments of the State Council considers factors such as actual control of the enterprises with foreign investment decisions.
The Commerce Department said, will listen to opinions of the public on the basis of further research on this issue and put forward recommendations.
Analysts pointed out that, if the draft passed, meaning Ali, shares in companies such as Baidu can be considered Chinese investors and foreign-funded enterprises. This means that these firms doing business in China will be faced with even smoother than before.