U.S. SEC Warns Investors Of Risks From Certain Chinese Variable Interest Entities(VIE)

Translated by: MOS Gourmet Team-AlexZ

Reuters news on September 20th, the US Securities and Exchange Commission (SEC) issued the latest warning to investors that investment in variable interest entities (VIE) that have contracts with Chinese business entities but do not have actual control rights have serious potential risk.

It is reported that Chinese concept stocks listed in the United States often open a subsidiary in China. The subsidiary signed a power of attorney, equity pledge agreement, exclusive service or business cooperation agreement with the VIE variable interest entity established in China. Since the CCP restricts foreign ownership of shares in companies in key industries, it often only raises funds from US investors through VIE agencies but does not allocate company ownership. The SEC warned that investors will not only be subject to CCP’s judicial supervision during the execution of the contract but may also be affected by the potential risks of conflict of interest between entity owners and US shareholders. The SEC has reminded investors of the risks of investing in China’s concept stocks several times. This investment warning to VIE will further indirectly promote the soft decoupling of the US and China economies.



Edited by: Eglise Bell 圣母院钟声

Posted by: Eglise Bell 圣母院钟声

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