## Core Points of Compliance Review for Foreign Investment Access under VIE Structure

The VIE (Variable Interest Entity) structure, commonly used by Chinese companies for overseas listings, requires compliance review to focus on industry access restrictions. According to the Special Administrative Measures (Negative List) for Foreign Investment Access, if the target industry falls under sectors where foreign investment is prohibited or restricted, the contractual control of the VIE structure may be considered as circumventing regulation. Key review points include: confirming whether the industry is on the negative list, assessing the legal validity of contractual control (e.g., whether it constitutes actual control), and verifying whether the background of foreign shareholders triggers national security review. In practice, regulatory scrutiny of VIE structures has intensified, with additional attention needed in areas such as data security and value-added telecommunications. Companies should proactively organize their equity structure, ensure foreign shareholding ratios comply with regulations, and retain complete contractual documents for inspection.

## Risk Prevention and Control Pathways and Compliance Response Strategies

## Potential Risks of VIE Structure and Preventive Measures Enterprises can adopt multi-dimensional preventive measures against the potential risks of the VIE structure. First, optimize agreement design and strengthen control clauses, such as voting rights delegation and purchase options, while avoiding being deemed as "actual control" to circumvent foreign investment restrictions. Second, establish a dynamic compliance mechanism to regularly update the negative list and industry policies. For example, the 2024 *Cybersecurity Review Measures* require platforms with over one million user information records to apply for review. Additionally, set up a domestic Special Purpose Vehicle (SPV) to isolate risks, or introduce domestic shareholders to reduce the proportion of foreign investment. If already facing review, proactively communicate with regulatory authorities and provide compliance documentation (e.g., records of substantive business operations). Finally, consider alternative structures, such as the red-chip structure or joint venture model, to diversify risks.