VIE, also known as "agreement control", refers to an investment structure in which foreign investors control domestic business entities through a series of agreement arrangements, and can obtain economic benefits from domestic business entities without acquiring their equity.
At present, due to the historical reasons of foreign investment access, most domestic Internet companies (including Internet giants such as BAT) have adopted the VIE architecture pioneered by Sina.
The purpose of VIE architecture is:
Usually used for foreign investors to invest in business entities in areas where foreign investment is restricted or prohibited in China; Realize the purpose of overseas listing of domestic business entities.
General setup steps of VIE architecture:
1. The founder established a BVI company in his own name.
2.BVI Company established Cayman Company.
3.BVI Company was founded by Cayman Company.
4. The Hong Kong company was established by BVI Company.
5. Wholly foreign-owned enterprise (WFOE) was established in China by a Hongkong company.
6.WFOE controls domestic enterprises through a series of agreements to achieve the goal of holding domestic entity companies.