What does VIE stand for?
variable interest entity
VIE is an accounting acronym that stands for variable interest entity. If your company is the primary beneficiary of a VIE, you generally must consolidate that VIE into your financial statements.
What is VIE China?
Over the past two decades, Chinese issuers have widely used the variable interest entity (VIE) structure to raise overseas capital while, at the same time, ‘satisfying’ China’s regulation of foreign investment in industries that are closed or restricted to foreign capital.
How do you tell if a company is a VIE?
4.1 Determining whether an entity is a VIE
- Lack the power to direct activities that most significantly impact the entity’s economic performance.
- Possess nonsubstantive voting rights.
- Lack the obligation to absorb the entity’s expected losses.
- Lack the right to receive the entity’s expected residual returns.
Is Alibaba a VIE structure?
The Chinese government has been pressuring companies to invest in ‘common prosperity’, an initiative to reduce inequality in the country. But in my opinion, the main risk of Alibaba and other Chinese tech companies remains the Variable Interest Entity (VIE) structure.
Is VIE a word in English?
verb (used without object), vied, vy·ing. to strive in competition or rivalry with another; contend for superiority: Swimmers from many nations were vying for the title.
Why do Chinese companies use VIE?
Most offshore-listed Chinese tech firms, including Alibaba Group and JD.com , use this structure, which gives them more flexibility to raise capital, while also bypassing the scrutiny and lengthy IPO vetting process that companies incorporated in China have to go through.
Do you actually own Chinese stocks?
Many investors may be surprised to find out that, despite spending money on what they presume to be stock, they do not actually own anything in China. It walks and talks like a stock, but it is not a stock.
What is VIE investment?
A variable interest entity (VIE) refers to a legal business structure in which an investor has a controlling interest despite not having a majority of voting rights. Investors in VIEs do not participate in residual gains or losses.
Does NIO use VIE?
One of the largest risk factors surrounding NIO’s US-listed stock is its variable interest entity (or VIE) structure. This structure doesn’t provide any shareholding into the actual company, it’s not permitted under the Chinese law and there’s no telling what’ll happen to NIO’s shares going forward.
Is NIO a VIE?
Like many Chinese companies with listings outside of China, Nio is a variable-interest entity, or VIE, a structure created in the 1990s as a workaround for Chinese companies that are not allowed to have direct foreign ownership.
Is Tencent a VIE company?
In the following two decades, companies including Tencent, Baidu, Alibaba have all gone public overseas through VIEs.
Is vie Latin?
English vie comes from the Latin verb meaning “to invite” as in to invite a challenge.
Does vie mean life?
C’est la vie literally means “this is the life” in French, taken as “that’s life.” Found in French well before, the expression was borrowed into English by the 1880s.
Is Vie a word in English?
What is VIE risk?
The VIE risk The VIE structure is of questionable legality in China, and the Chinese government could confiscate foreign investments in BABA if they decide foreign investments made in BABA under the VEI structure are illegal according to Chinese law.
Is Tencent Hong Kong a VIE?
There are close to 100 Chinese companies listed in the U.S. with a VIE structure and many in Hong Kong. Most well-known Chinese Internet companies, such as Tencent, Alibaba, Pinduoduo, Baidu, JD and NetEase, all operate under a VIE structure.
Who owns most Alibaba stock?
Softbank Group Softbank’s stake in Alibaba is equivalent to approximately 25% of the company; it is Alibaba’s largest shareholder.