- Key Excerpts
- VIE Structure
- VIE Risks
- VIE Revenue
Key excerpts from filing(s) - related to VIEs
Current PRC laws and regulations place certain restrictions on foreign ownership of companies that engage in telecommunication business, including mobile application providers. Specifically, foreign ownership in a value-added telecommunication mobile payment service provider may not exceed 50%.
We currently conduct our operations in China principally through contractual arrangements among our wholly owned subsidiary NQ Mobile (Beijing) Co., Ltd (“NQ Beijing”), our consolidated affiliated entity Beijing NQ Technology Co. Ltd. (“Beijing Technology”) and its shareholders.
Beijing Technology and its subsidiaries hold the licenses and permits necessary to conduct our businesses in China.
Although we registered the equity pledge agreement with the shareholders of our subsidiaries so that we are able to enforce the pledge against any third parties, these contractual arrangements may not be as effective as direct ownership in providing us with control over Beijing Technology.
The shareholders of Beijing Technology are Dr. Vincent Wenyong Shi, our founder, chairman of the board and chief operating officer, Ms. Lingyun Guo, our director and chief strategy officer, and Mr. Xu Zhou, our founder, holding 14.75%, 52.00% and 33.25% of Beijing Technology’s equity interests, respectively. Dr. Shi, Ms. Guo and Mr. Zhou also collectively beneficially own RPL, which holds 10.3% of common shares and 53.5% of voting power in our Company.
Conflicts of interest may arise between the dual roles of those individuals who are both executive officers of our company and shareholders of Beijing Technology. We do not have existing arrangements to address potential conflicts of interest between those individuals and our company and cannot assure you that when conflicts arise, those individuals will act in the best interest of our company or that such conflicts will be resolved in our favor.
Risks identified in filing(s) - related to VIEs
If the PRC government finds that the agreements that establish the structure for operating our businesses in China do not comply with PRC governmental restrictions on foreign investment in telecommunication business, 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 Beijing Technology and its shareholders for our operations, which may not be as effective as direct ownership in providing operational control and may negatively affect our ability to conduct our business.
Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law and it may impact the viability of our current corporate structure, corporate governance and business operations.
Contractual arrangements with Beijing Technology may result in adverse tax consequences to us.
The shareholders of Beijing Technology may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.
We may rely principally on dividends and other distributions on equity paid by our PRC and HK subsidiaries to fund any cash and financing requirements we may have. Any limitation on the ability of our PRC and HK subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business.
PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from making loans to our PRC subsidiaries and consolidated affiliated entities or making additional capital contributions to our PRC subsidiaries, which may materially and adversely affect our liquidity and our ability to fund and expand our business.
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Ownership and Voting power details
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