The Chinese State Administration for Market Regulation accepts the first merger filing involving a variable interest entity structure (Shanghai Mingcha Zhegang / Huansheng Information Technology)

Preamble On 20 April 2020, China’s State Administration for Market Regulation ("SAMR") formally accepted a filing for the Establishment of a Joint Venture between Shanghai Mingcha Zhegang Management Consulting Co., Ltd. (“SMZ”) and Huansheng Information Technology (Shanghai) Co., Ltd. ("SMZ Case"). This is the first time that SAMR formally accepted a transaction involving a VIE structure. This article reviews the dilemma in merger filings involving a VIE structure in China and its origins, discusses possible changes of SAMR’s attitudes towards the VIE issue and the issues yet to be clarified. Companies are recommended to re-assess carefully their future merger filing strategies in China when facing VIE issues, and the impact on their transactions. 1. Reviewing the Current Status:

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