The China VIE Structure is Vulnerable – So Why is it Still Used?

The accounting definition of “variable interest entity” (VIE) means an entity in which an investor holds a controlling interest that is not based on owning the majority of voting rights.  To non-accountants, the VIE structure is a business structure that is widely used by Chinese companies in certain “sensitive” or “strategic” business sectors that have…

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Flip Transactions

Foreign startups “flip” into a U.S. corporate legal structure for various considerations, including: exit opportunities (whether through acquisition or the public market); potential higher valuations; broadening their investor base (some U.S. institutional investors may have internal rules prohibiting their investment in non-U.S. companies); and most commonly, accessing U.S. venture capital, which generally only invests in…

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WHY CLICKING SEND COULD LEAD TO A BINDING LEGAL CONTRACT

Thanks to the growing popularity of smartphones and communications technologies, it is not uncommon to conduct the bulk of your business over e-mail, including contract negotiation. While corresponding by e-mail can help close a deal more quickly, it can also lead to unintended consequences. How is a contract formed? Many professionals don’t realize that an…

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