What does vie architecture mean? A new way of overseas listing

VIEs (Variable Interest Entity) is a protocol mode, which is also called "protocol control structure" or "Sina structure" in China. VIE refers to the separation of overseas listed entities from domestic listed entities, and the overseas listed entities control the domestic listed entities through agreements, so as to achieve the purpose of merging the accounting statements of domestic listed entities into overseas listed entities, and the domestic listed entities are VIE (variable interest entities) of overseas listed entities.

Generally speaking, the essence of VIE structure is a way adopted by domestic entities to achieve overseas listing-the company to be listed first establishes a parallel offshore company in Cayman Islands or British Virgin Islands, and regards this offshore company as the future listing or financing entity. Its shareholding structure reflects the real shareholding structure of the company to be listed, but the domestic company to be listed does not necessarily reflect this shareholding structure.

After a series of investment activities, offshore companies finally landed in China as foreign-invested enterprises (WFOE). WFOE has signed a series of agreements with listed companies, and listed companies will transfer most of their profits to WFOE. In this way, the top offshore companies become the shadow companies of the companies to be listed, so they can land in foreign capital markets.

VIE framework is now mainly used for China enterprises to achieve overseas listing financing, and foreign investors evade domestic regulatory restrictions on the access of foreign-funded industries.

Since listing on NASDAQ in April 2000, and becoming the first Internet company to adopt VIE structure, Internet companies such as Sohu, Baidu, Alibaba and Shanda Games have also achieved overseas listing through VIE structure. At the same time, this model also extends to the field of education and training (represented by New Oriental Education Group) and new media fields such as advertising (represented by Focus Media and China Television Media).