China Updates
Regulatory Scrutiny and Unwinding the Red-Chip Structure
Generally, a Red-chip structure refers to a cross-border shareholding structure whereby the shareholders of a PRC domestic operating entity establish a Special Purpose Vehicle (“SPV”) offshore and subsequently exercise direct or indirect control over the said PRC domestic operating entity through equity ownership or contractual arrangements with the offshore SPV. Enterprises that adopt the above structure are commonly referred to as the "Red-chip Enterprises."
For decades, the ...