How to build a VIE architecture，How many BVI companies and Cayman companies need to be registered? Why do large companies choose to register companies in Cayman? Based on past records，Asian tycoon Jiacheng reorganizes its group companies，And moved the reorganized company registration location from Hong Kong to the Cayman Islands。Country Garden、Shimao Real Estate、rather、Anta、Xtep，Baidu、Alibaba、focus media、Renren、Qihoo 360…these companies we are familiar with are all registered companies in Cayman。
The world's 25 largest banks have subsidiaries or branches in Cayman。over the past 20 years，Among the 50 mainland family companies listed in Hong Kong with the largest asset range，A total of 44 companies are registered in the Cayman Islands。20091,145 companies were listed in Hong Kong and 388 were registered in Cayman.。2010In the first eight months, 44 companies were listed in Hong Kong and 31 were registered in Cayman.。
(Cayman Company Registration、BVI company registration and construction of VIE structure) 1、What is VIE architecture VIE(VariableInterestEntity)，variable interest entity，Also known as "agreement control" refers to foreign investors controlling domestic operating entities through a series of agreement arrangements.，An investment structure that obtains economic benefits from domestic operating entities without acquiring equity interests in domestic operating entities。
The VIE structure is usually used by foreign investors to invest in operating entities in areas where foreign investment is restricted or prohibited in China.。At the same time, the VIE structure is also an investment structure commonly used by these domestic operating entities to achieve overseas listings.。
It is currently recognized that Sina first created the VIE model in 2000 when it went public in the United States.，This model has been recognized by the US GAPP，And specially created the "VIE Accounting Standards" for this purpose，This model has since been widely used by Chinese companies listed overseas.。two、Reasons for VIE structure to build VIE structure，Mainly to circumvent three restrictions。
- There are obstacles to directly listing a company registered in China overseas. There are two reasons.，One reason is that overseas exchanges such as the New York Stock Exchange、The places of registration accepted by the Hong Kong Stock Exchange and others do not include China.;Another reason is，Even if overseas exchanges accept companies registered in China，However, Chinese companies listing overseas must obtain approval from China’s securities regulatory authorities.，In reality, except for H shares,，Previously, the probability of obtaining approval from Chinese regulatory authorities for overseas listings was very low.。
To circumvent this restriction，It is necessary for the listed company to register a company overseas，Cayman is usually chosen(Cayman)Waiting place，Mainly because these places are tax havens and have perfect laws。
- Mainland China’s restrictions on Internet communications(TMT)In theory, there are restrictions on the entry of foreign capital in some industries, including，After registering a company abroad，You can directly choose foreign investment to control operating entities in China.，That is, WFOE direct equity investment in domestic companies in mainland China，However, due to the restrictions on the entry of foreign capital in the industries in which domestic companies operate,，Therefore, a series of agreements were designed to lock in the control of WFOE and its overseas shareholders over the management rights of domestic companies.，And this design is in line with listing on overseas exchanges
Require
of。
- "Order No. 10" has been restricted since 2006 when China's Ministry of Commerce and other six ministries and commissions jointly issued the "Regulations on the Mergers and Acquisitions of Domestic Enterprises by Foreign Investors" (referred to as "Order No. 10")，Provisions on “related mergers and acquisitions”，It is regarded by the industry as tightening the approval of indirect overseas listings of Chinese domestic companies (related mergers and acquisitions are a commonly used transaction structure for Chinese domestic companies to raise funds overseas)。
In view of the fact that after the promulgation of "Order No. 10"，Few companies have obtained approval from the Ministry of Commerce for “related-party mergers and acquisitions”，Some companies that are not subject to foreign investment restrictions have also begun to try to use the VIE method to build overseas financing structures.，To avoid submitting its overseas financing structure to the Ministry of Commerce of China for approval in accordance with Order No. 10。
three、The construction of VIE architecture The construction of VIE architecture is mainly divided into the following steps:：
- Domestic founder shareholders set up offshore companies (such as BVI companies)。Generally speaking，Each shareholder needs to set up a separate offshore company(Registration is simple，Highly confidential)，The profits gained in this way can make better tax arrangements in the future.、It is also more flexible when carrying out equity transfers。
- Establish an offshore company in Cayman as a listing entity(Cayman company tax exemption，and has common law system
Advantages
，Yingmei Aoxin(New Zealand)Hong Kong belongs to the common law system)。
- Cayman company sets up Hong Kong company，Hong Kong companies can facilitate tax planning and future recapitalization。
- Hong Kong companies set up domestic foreign-funded companies in the territory，i.e. WFOE company，The subject of the agreement to exercise control over mainland operating companies。
- Domestic foreign-funded companies sign agreements with domestic-funded companies，These agreements mainly include："Equity Pledge Agreement"、"Business Operation Agreement"、"Exclusiveness and Service Agreement"、"Loan Agreement" and "Entrusted Management Agreement"、"Shareholder Voting Agency Agreement"、"Exclusive Option Agreement" etc.。
Four、The dismantling of the VIE structure. In 2014, Baofeng Video dismantled the VIE structure and went public on the A-share market, creating a market value myth.，This has prompted a wave of Chinese concept stocks dismantling their VIE structures and returning to A-shares.。
Simply put, the dismantling of the VIE structure can be roughly divided into the following four steps:：
- Domestic capital fully acquires WFOE company，Turn it into a domestic enterprise；
- Buyback of foreign-owned shares；
- Termination of relevant agreements；
- Cancellation of overseas companies。one、Register a Cayman Islands Company
Advantages
：
- Registration is simple,Only one shareholder is needed、a director，And the shareholder and director can be the same person。
- Registered capital 50,000 US dollars，No capital verification required。
- The company's business operations are not local，No need to pay local tax，Available Cayman companies to invest domestically。
- Keep shareholder information confidential。
- Free choice of company name。
- High visibility，Mainland China’s large private enterprise giants or some state-owned enterprises such as Alibaba、Baidu、Jingdong、China Unicom、Sina、Lenovo and other companies are also registered in the Cayman Islands.。
- Cayman Islands offshore companies can choose to issue registered or bearer shares，Registered shares and bearer shares are interchangeable。
- Used for company structure building、Reorganization，Easy to list overseas。
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