Shanghai Suspends Key Approval on Route to Offshore Listings
- Applications for outbound investment into VIEs being denied
- Shanghai’s NDRC says not rejected ODI requests due to VIE use
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Officials in China’s financial capital of Shanghai are closing a route used for decades by companies operating in the technology sector to draw foreign investment.
Startups that have recently applied to Shanghai’s National Development and Reform Commission for permission to inject money into affiliated entities incorporated in places like the Cayman Islands are being turned away, according to people familiar with the matter. Such outbound direct investment is one common way Chinese companies have established and then put money into so-called variable interest entity structures -- a process used to attract foreign investment and list overseas.