- Key Excerpts
- VIE Structure
- VIE Risks
- VIE Revenue
Key excerpts from filing(s) - related to VIEs
While the distribution of mutual funds and asset management plans sponsored by mutual fund management companies is not explicitly categorized as restricted to foreign investment, a license is required for the direct sales of mutual fund and asset management plans sponsored by mutual fund management companies.
In practice, such license is generally unavailable to foreign-invested enterprises or their subsidiaries. In order to conduct our direct sales services in the future, we have entered into contractual arrangements through Shanghai Juxiang Investment Management Consulting Co., Ltd., or Shanghai Juxiang, which is one of our PRC subsidiaries, with Shanghai Jupai.
Yumao, a wholly owned subsidiary of Shanghai Jupai, holds such license.
Part of our business includes conducting market surveys, which is defined by the current Foreign Investment Catalogue to mean the collection and analysis of information concerning the performance and prospects of certain commercial products and/or services. Market survey is categorized as restricted to foreign investment.
The license application is subject to stringent requirements and is ultimately subject to the discretion of the relevant authority. Because Shanghai Juxiang is unable to obtain such license, we conduct such activities through Shanghai Jupai, which, as a domestic PRC company, is not required to obtain such license for market survey
We provide asset management services through contractual arrangements between Baoyi Investment Consulting (Shanghai) Co., Ltd., or Shanghai Baoyi, which is one of our PRC subsidiaries, and Shanghai E-Cheng Asset Management Co., Ltd, or Shanghai E-Cheng.
We rely on contractual arrangements with our VIEs, Shanghai Jupai and Shanghai E-Cheng, and their respective shareholders to operate a portion of our operations in China, including asset management services, market survey and the direct sale of mutual funds and asset management plans sponsored by mutual fund management companies. These contractual arrangements may not be as effective as direct ownership in providing us with control over our VIEs.
In 2014, 2015 and 2016, Shanghai Jupai, Shanghai E-Cheng and their respective subsidiaries and branches contributed 11%, 40% and 65% of our total net revenues.
Shanghai Jupai is approximately 67.7% owned by Mr. Tianxiang Hu, our co-chairman of the board of directors and chief executive officer and 10% owned by Dr. Weishi Yao. Conflicts of interest may arise between the roles of Mr. Hu and Dr. Yao as shareholders, directors and officers of our company and as shareholders, directors and officers of our VIEs. We rely on these individuals to abide by the laws of the Cayman Islands, which provide that directors and officers owe a fiduciary duties to our company that requires them to act in good faith and in the best interest of our company and not to use their positions for personal gains.
Shanghai E-Cheng is 50.0% owned by Zuyu Ding and 50.0% owned by Weijie Ma. Mr. Ding and Mr. Ma are both employees of E-House and there are potentially conflicts of interests between the roles of Mr. Ding and Mr. Ma as nominee shareholders of Shanghai E-Cheng and as employees of E-House.
We cannot assure you that when conflicts arise, shareholders of our VIEs will act in the best interest of our company or that conflicts will be resolved in our favor. These individuals may breach or cause the VIEs to breach the existing contractual arrangements.
Risks identified in filing(s) - related to VIEs
If the PRC government finds that the agreements that establish the structure for operating certain of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
We rely on contractual arrangements with our VIEs, and their respective shareholders for a portion of our China operations, which may not be as effective as direct ownership in providing operational control.
The shareholders of our VIEs may have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our business may be materially and adversely affected.
Our ability to enforce the equity pledge agreements between us and the shareholders of Shanghai Jupai and Shanghai E-Cheng may be subject to limitations based on PRC laws and regulations.
If any of our VIEs and their subsidiaries becomes the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy their assets, which could reduce the size of our operations and materially and adversely affect our business.
Our contractual arrangements with our VIEs may result in adverse tax consequences to us.
Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance, business operations and financial results.
||Contribution of VIEs %
|RMB (in millions)
Ownership and Voting power details
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