HKU Chinese Law Professor Angela Zhang on China's Foreign IPOs Rules

The video discusses the Variable Interest Entity (VIE) structure, its legal status, and potential regulatory changes in China. It highlights the impact on companies listed in the US and Hong Kong, emphasizing the need for cybersecurity reviews and transparency. The discussion also covers the implications for foreign investors and the possibility of steering Chinese companies back to domestic exchanges. Specific concerns about companies like DD Global are addressed, focusing on cybersecurity and national security issues.

What has been the government's stance on VIE structures over the past two decades?

• They have been completely banned.

• They have been operating in legal gray areas.

• They have been fully legalized.

• They have been ignored by the government.

What new requirement might companies using VIE structures face?

• A cybersecurity review and increased transparency.

• A complete ban on their operations.

• Immediate delisting from all stock exchanges.

• Mandatory relocation to Hong Kong.

What is the main focus of the recent draft measures reported by Bloomberg?

• Banning all foreign investments in China.

• Reducing the number of tech companies in China.

• Addressing data security and ownership disclosure.

• Encouraging more foreign companies to list in China.

What could be a potential reason for regulatory changes regarding VIE structures?

• To encourage companies to list on the NASDAQ.

• To facilitate a homecoming of Chinese companies to domestic exchanges.

• To increase foreign investment in Chinese companies.

• To eliminate all VIE structures.

How might the new regulations affect companies like DD Global?

• They will be required to increase their foreign ownership.

• They will be unaffected by the new rules.

• They may face delisting due to cybersecurity concerns.

• They will be forced to merge with other companies.

What is a key concern for foreign investors regarding VIE structures?

• The need to increase their shareholding.

• The potential dilution of their voting rights.

• The obligation to sell their shares immediately.

• The requirement to relocate to China.

What might companies need to do to comply with new ownership regulations?

• Revamp their ownership structure to ensure Chinese control.

• Sell all their shares to foreign investors.

• Increase foreign ownership.

• Move their headquarters to Hong Kong.