How a VIE works
- An offshore holding company owns a WFOE in China.
- Chinese individuals own the domestic operating company that holds the restricted licences.
- A set of contracts (exclusive services, equity pledge, call option, voting proxy) gives the WFOE control and economic benefit.
Key risks
- Enforceability of the control contracts
- Conduct of the nominee shareholders
- Regulatory change, including filing requirements for overseas listings with the CSRC
Our approach
We first check whether a simpler structure works. If a VIE is genuinely needed, we draft and maintain the contract set and advise on disclosure.
Related: Joint ventures · Can a foreigner own 100% of a company in China?
Frequently asked questions
Are VIE structures legal?
They are not expressly prohibited, but they are not formally recognised either, and they work around ownership restrictions. Chinese courts and regulators can scrutinise them, so investors need to understand the risk clearly.
Do I need a VIE now that many sectors have opened up?
Often not. The Negative List has been shortened repeatedly, and many businesses that once needed a VIE can now use a WFOE or joint venture. Check before choosing the more complex route.
Reviewed by Admin, Choi & Partners · 3 October 2026. This page is general information, not legal advice.