VIEs

For Sohu’s Business
  • High Century, a PRC company that was incorporated in 2001. As of December 31, 2016, Dr. Charles Zhang, our Chairman of the Board and Chief Executive Officer, and Wei Li, one of our employees, held 80% and 20% interests, respectively, in this entity;
  • Heng Da Yi Tong, a PRC company that was incorporated in 2002. As of December 31, 2016, Dr. Charles Zhang and Wei Li held 80% and 20% interests, respectively, in this entity;
  • Sohu Internet, a PRC company that was incorporated in 2003. As of December 31, 2016, High Century held a 100% interest in this entity;
  • Donglin, a PRC company that was incorporated in 2010. As of December 31, 2016, Sohu Internet held a 100% interest in this entity;
  • Tianjin Jinhu, a PRC company that was incorporated in 2011. As of December 31, 2016, Xiufeng Deng and Xuemei Zhang, both of whom are our employees, each held a 50% interest in this entity:
  • Guangzhou Qianjun, a PRC company that we acquired in November 2014. As of December 31, 2016, Tianjin Jinhu held a 100% interest in this entity; and
  • Focus Interactive, a PRC company that was incorporated in July 2014. As of December 31, 2016, Heng Da Yi Tong held a 100% interest in this entity.
For Sogou’s Business
  • Sogou Information, a PRC company that was incorporated in 2005. As of December 31, 2016, Xiaochuan Wang, Sogou’s Chief Executive Officer, High Century and Tencent held 10%, 45% and 45% interests, respectively, in this entity.
For Changyou’s Business
  • Gamease, a PRC company that was incorporated in 2007. As of December 31, 2016, High Century held a 100% interest in this entity;
  • Guanyou Gamespace, a PRC company that was incorporated in 2010. As of December 31, 2016, Beijing Changyou Star Digital Technology Co., Ltd (“Changyou Star”) held a 100% interest in this entity;
  • Shanghai ICE, a PRC company that was acquired by Changyou in 2010. As of December 31, 2016, Gamease held a 100% interest in this entity;
  • Wuhan Baina Information, a PRC company that Gamease acquired in July 2014. As of December 31, 2016, Changyou Star and Yongzhi Yang, the former chief executive officer of MoboTap, held 60% and 40% interests, respectively, in this entity.
  • Key Excerpts
  • VIE Structure
  • VIE Risks
  • VIE Revenue
  1. 2016 annual report lists 12 VIEs
  2. Sohu's Business VIEs - High Century, Heng Da Yi Tong, Sohu Internet, Donglin, Tianjin Jinhu, Guangzhou Qianjun and Focus Interactive
  3. Sogou’s Business VIE - Sogou Information
  4. Changyou’s Business VIEs - Gamease, Guanyou Gamespace, Shanghai ICE and Wuhan Baina Information

Key excerpts from filing(s) - related to VIEs

Various regulations in the PRC restrict or prohibit WFOEs from operating in specified industries such as Internet information, online game, mobile, Internet access, and certain other industries.
We are a Delaware corporation
In order to comply with PRC regulatory requirements, we conduct our Internet and value-added telecommunication operations in the PRC through our VIEs that are incorporated in the PRC and owned by certain of our employees.
These arrangements may not be as effective in providing control over our Internet content, telecommunications operations, online games operations and certain other as direct ownership of these businesses. For example, if we had direct ownership of our VIEs, we would be able to exercise our rights as a shareholder to effect changes in their boards of directors, which in turn could effect changes at the management level. Due to our VIE structure, we have to rely on contractual rights to effect control and management of our VIEs, which exposes us to the risk of potential breach of contract by the VIEs or their shareholders, such as their failing to use the domain names and trademarks held by them, or failing to maintain our Internet platforms, in an acceptable manner or taking other actions that are detrimental to our interests.

Risks identified in filing(s) - related to VIEs

Although the Sohu Group holds substantial amounts of cash and cash equivalents, a significant portion of such cash and cash equivalents is held by Changyou and Sogou, and it can be difficult for Sohu to have access to the portion held by Changyou and Sogou.
Our interests in our two primary controlled subsidiaries could be significant diluted.
In order to comply with PRC regulatory requirements, we operate our main businesses through companies with which we have contractual relationships but in which we do not have an actual ownership interest. If our current ownership structure is found to be in violation of current or future PRC laws, rules or regulations regarding the legality of foreign investment in the PRC Internet sector, we could be subject to severe penalties.
We may be unable to collect long-term loans to officers and employees or exercise management influence associated with High Century, Heng Da Yi Tong, Tianjin Jinhu, Sogou Information, Gamease and Guanyou Gamespace.
We depend upon contractual arrangements with our VIEs for the success of our business and these arrangements may not be as effective in providing operational control as direct ownership of these businesses and may be difficult to enforce.
A failure by our VIEs or their shareholders to perform their obligations under our contractual arrangements with them could have an adverse effect on our business and financial condition.
The contractual arrangements between our subsidiaries and our VIEs may result in adverse tax consequences.
We may lose the ability to use and enjoy assets held by any of our VIEs that are important to the operation of our business if such VIE declares bankruptcy or becomes subject to a dissolution or liquidation proceeding.
Frequent press reports in the United States questioning the VIE structure used by us and other Chinese companies publicly-traded in the United States appear to have created concern among investors, and may cause such an effect in the future.
Year Total Revenue VIEs Revenue Contribution of VIEs %
USD (in millions)
2014 1,673 1,064 63.60%
2015 1,937 1,181 60.97%
2016 1,650 895 54.24%

Ownership and Voting power details

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