Examples of agreements granting effective control over LIFE: appeal option agreements, voting rights or agents, loan contracts. The September 28, 2009 communication on strengthening the control and authorisation of online gaming and the review and authorization of imported online games (“Online Games Notice”) provides that foreign investors cannot invest in online games through WFOE, a joint venture or contractual joint venture, and expressly prohibits foreign investors from acquiring or participating in the control of domestic online gaming operators. , such as the creation of other joint ventures, the signing of relevant agreements or the provision of technical assistance. We do not know whether the listed companies that use the life structure have been sanctioned or whether they have had to dismantle the life structure. The simplest life structure includes a foreign holding company, which is often a tax-exempt limited company in the Cayman Islands, a Chinese company wholly owned abroad (WFOE) and a Chinese national company owned solely by Chinese nationals. As mentioned earlier, all 11 Chinese IPOs in the United States were integrated into the Cayman Islands in the three months ending January 31, 2020. The founders, foreign investors and other shareholders hold shares in the Caymans holding company, which in turn holds a 100% stake in WFOE. The Chinese domestic company obtains the license to operate in the banned or restricted industry in China. WFOE exercises de facto control of the domestic enterprise through a number of contractual agreements between WFOE and the national company. The annual accounts of the Cayman holding company are consolidated with WFOE and VIE, making the holding company financially viable. The SEC`s submissions for current IPOs contain the current state of the control agreements` technology. Loan contract. The founders borrowed money from Dangdang Information to capitalize Dangdang Kewen.
Using Dangdang information instead of the cayman island parent company to make the loan, the agreement between two Chinese companies, is the need to do with the state management of currencies. In July 2006, the IRO issued the circular on strengthening the management of foreign investment in value-added telecommunications companies (the “IBD Circular”), which imposes, among other things, certain important assets (such as trademarks, domain names and telecommunications equipment such as routers and servers) that must be held directly by 6Es and nominees to carry out VAT transactions. Although the IBD circular does not explicitly mention, it is generally accepted that the life structure was the objective of the IBD. Before the IBD circular, it was customary to see LIFE agreements whose LIFE was essentially a shell. In these agreements, WFOE would essentially own all the technical assets and assets and trademarks used by trademark law and provide them to LIFE through services and intellectual property licensing agreements in return for royalties and royalties corresponding to the profits generated by LIFE. As a result of the IBD circular, it became necessary for LIFE to have more substance.