The Issues and Research upon the Syndicated Loan in the VIE Structure

• Main Authors: Li Wen Hung, 洪麗雯
• Other Authors: 王文杰教授
• Format: Others
• Language: zh-TW
• Published: 2015
• Online Access: http://ndltd.ncl.edu.tw/handle/73775427532047033155

碩士 === 東吳大學 === 法律學系 === 103 === The so-called variable interest entities (VIE) structure, a term described from American Financial Accounting Standards, represents the principle of party autonomy in private law, by means of autonomous agreements of parties to reflect economic relations and profits allocation. To speed to market, innovative enterprises in mainland China particularly took advantage of VIE structure, bypassing restrictions of regulation, and making a great prosperity in pan-internet industry during the past decades of years. Financial agencies also support these prosperous VIE-based companies by methods of joint loans and cross-border security payment, to minimize the uncertain risk from the laws and policies. However, syndicated loan within the territory of China is incapable of officially financial support to this industry under the restriction of the regulation. The leading problem is attributed to the ambiguous attitude of the China government towards VIE-based companies, with several latest cases to illustrate the vulnerable VIE structure. The China government should think about the issues and immediate actions to monitor VIE-based companies and to ensure creditor's rights of financial institution from dishonest diversion of assets and vexatious actions of law; in the worst case, overseas investment shareholders and financial institutions involving in joint-loan would lose everything. With the development of draft amendment of Foreign Investment Law, not only domicile standards define foreign investor, but also practical-control standards are introduced, including conditions of contracts, and trust funds which influenced critically on the management, finance, personnel, and technology of the company. Domestic enterprises under the control of foreign investor are regarded as foreign investment. On the other hand, foreign investment under the control of China investor is examined by department of commerce, and the investment within China territory can be regarded as domestic investment. Under the VIE investment structure, the offshore company should follow the Guidance on Administration for Foreign Investment Access if the condition fulfilled the criteria of control standard and foreign investment in the draft amendment of Foreign Investment Law. By contrast, domestic company approved by department of commerce should obey the relevant regulation to domestic enterprise in China. There will be corresponding administrative and criminal liability for intentional evation of law. Before draft amendment of Foreign Investment Law pass the legislation, as long as there is no significant risk in administration in the VIE-based companies, such as AliBaBa Group Holding Ltd., the law risk of VIE structure might be understated in the legal opinion provided by the leading bank of the joint loan. For this reason, it is their willing of choice for participants in the investment or financing to bear the possible combined risk from the laws, and the policies.