The dark cloud over the variable interest entity

A recent court ruling involving Chinachem’s stake in China Minsheng Bank challenged the validity of the popular VIE setup.

By I-Ching Ng

Jul 18, 2013

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After the decade-long legal battle of Hong Kong developer Chinachem over its investment in China Minsheng Banking Corporation’s shares via an entity it entrusted in China, lawyers quickly sensed China’s supreme court decision to nullify Chinachem’s entrustment contracts has cast a dark cloud over the future of variable interest entity (VIE) structures.

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