• Key Excerpts
  • VIE Structure
  • VIE Risks
  • VIE Revenue

Key excerpts from filing(s) - related to VIEs

Further, if we are deemed to have a non-PRC entity as a controlling shareholder, the provisions regarding control through contractual arrangements could reach our VIE arrangements, and as a result Long Yun could become subject to restrictions on foreign investment, which may materially impact the viability of our current and operations
It is uncertain whether we would be considered as ultimately controlled by Chinese parties. Mr. Yu Han, our chairman and chief executive officer and a PRC citizen, beneficially and indirectly owns 72.5% of our outstanding voting securities. It is uncertain, however, if these factors would be sufficient to give Mr. Yu Han control over us under the draft Foreign Investment Law.
It is uncertain whether the online crowdfunding industry, in which our variable interest entity operates, will be subject to the foreign investment restrictions or prohibitions set forth in the “negative list” that is to be issued.
Due to lack of guidance under this draft law, we are unable to ascertain the controlling status of our company although Mr. Yu Han, our chairman and chief executive officer and a PRC citizen, beneficially and indirectly owns 72.5% of our outstanding voting securities before this offering, and we cannot assure you of the controlling status of our company after the completion of this offering.
Therefore, if we are ultimately considered a foreign invested enterprise deemed to operate in either a “restricted” or “prohibited” industry, we may no longer conduct the business pursuant to a VIE structure and we could be subject to severe penalties or be forced to relinquish our interests in relevant industries, which in turn would materially impact our results of operations, as well as the value of your Ordinary Shares.

Risks identified in filing(s) - related to VIEs

There are significant uncertainties under the Draft Foreign Investment Law relating to the status of businesses in China controlled by foreign invested projects primarily through contractual arrangements, such as our business.
If we are ultimately considered a Foreign Invested Enterprise deemed to operate in either a “restricted” or “prohibited” industry, we may no longer conduct the business pursuant to a VIE structure, which in turn would materially impact our results of operations, as well as the value of your Ordinary Shares.
Under the PRC Enterprise Income Tax Law, or the EIT Law, we may be classified as a “resident enterprise” of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.
Our contractual arrangements with Long Yun and its shareholders may not be effective in providing control over Long Yun.
Because we conduct our business through Long Yun, a VIE, if we fail to comply with applicable law, we could be subject to severe penalties and our business could be adversely affected.
Our agreements with Long Yun are governed by the laws of the PRC and we may have difficulty in enforcing any rights we may have under these contractual arrangements.
Year Total Revenue VIEs Revenue Contribution of VIEs %
USD (in millions)
2016 1.7 1.7 100%
2017 3.6 3.6 100%

Ownership and Voting power details

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Source(s)