Chinese companies often use the Variable Interest Entity (VIE) structure to conduct initial public offerings (IPOs) outside the People’s Republic of China (PRC) and avoid certain restrictions on foreign investment. Recently the China Securities Regulatory Commission (CSRC) and other regulatory agencies published draft rules for such overseas offerings, which if adopted will be beneficial for investors. However, additional measures are needed to protect investors from a number of harmful practices currently occurring. Of particular concern is the use of depositary receipts (DRs) to offer securities in non-PRC markets. While many foreign companies use DRs to list outside their local market, the practice is especially problematic for PRC companies utilizing the VIE structure. That’s because i