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O’Melveny’s Zhang Quoted on China’s New Rules for Variable Interest Entity Structures

January 28, 2015 O’Melveny & Myers senior counsel Ning Zhang was quoted in two recent articles concerning the Chinese government proposed new rules to regulate the use of variable interest entity (VIE) structures in venture capital investment in restricted industries. In The Wall Street Journal’s January 21, 2015, article “China Looking To Ease Foreign-Investment Rules Covering Internet Companies,” Zhang noted that the new rules shift the focus of the regulator to the nationality of the people who control a company rather than its shareholders, and could signal a move toward allowing foreigners to invest directly in restricted Chinese companies. He also spoke to Asian Venture Capital Journal for the publication’s January 28, 2015, article “China VIEs: An End to Uncertainty?” In the piece, Zhang described the move as a “great development" that may lead to wider deregulation of foreign investment. "Under the new rule, [the Ministry of Commerce] will likely grandfather in all existing VIEs and foreign investors may use a VIE structure controlled by a Chinese national to invest in restricted businesses," he said.

Zhang resides in O'Melveny's Beijing office and is a member of the Firm’s Mergers & Acquisitions and Capital Markets Practices.