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Conflicting signals over stance
By Feng Jianmin |
September 21, 2011, Wednesday
|
Print Edition
Print Edition
CHINA may regulate a controversial corporate structure that enables domestic companies to lure foreign investment, the Ministry of Commerce said yesterday, adding to uncertainties over the government stance on the issue as there were calls from the Chinese securities regulator to ban it.
"There are currently no laws or regulations to regulate VIE," Shen Danyang, a ministry spokesman, said at a regular briefing in Beijing yesterday, referring to variable-interest entities, which allow foreign partners in Chinese companies to get a share of revenue through loan agreements, equity pledges, service contracts and other assorted agreements.
"The Ministry of Commerce and other related government agencies are studying ways to regulate such investment," Shen said without elaborating.
He added that he was not aware of the China's securities regulator's document that Reuters cited in its report.
Reuters reported on Sunday that the China Securities Regulatory Commission has asked the State Council, or China's Cabinet, to ban the controversial corporate structure, which helps foreign investors avoid government restrictions that bar direct investment in sectors including telecommunications, software, steel making, education and agriculture.
Sean Maguire, a counsel at Allbright Law Firm, said that "most of the protected sectors are investment hungry and foreign capital inflows appear to be tolerated as an acceptable evil as long as such transactions are carefully monitored."
"There are currently no laws or regulations to regulate VIE," Shen Danyang, a ministry spokesman, said at a regular briefing in Beijing yesterday, referring to variable-interest entities, which allow foreign partners in Chinese companies to get a share of revenue through loan agreements, equity pledges, service contracts and other assorted agreements.
"The Ministry of Commerce and other related government agencies are studying ways to regulate such investment," Shen said without elaborating.
He added that he was not aware of the China's securities regulator's document that Reuters cited in its report.
Reuters reported on Sunday that the China Securities Regulatory Commission has asked the State Council, or China's Cabinet, to ban the controversial corporate structure, which helps foreign investors avoid government restrictions that bar direct investment in sectors including telecommunications, software, steel making, education and agriculture.
Sean Maguire, a counsel at Allbright Law Firm, said that "most of the protected sectors are investment hungry and foreign capital inflows appear to be tolerated as an acceptable evil as long as such transactions are carefully monitored."
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