Today we completed work on SEC-131, which eliminated some redundancies in the definition of CollectionOfSecurityPrices and generalized the nature of the price included in a PriceStructure for ease of use. We also looked at where to add the notion of a variable interest entity for SEC-175.
From Wikipedia: Variable interest entity (VIE) is a term used by the Financial Accounting Standards Board (FASB) to refer to a legal entity with certain characteristics such that a public company with a financial interest in the entity is subject to certain financial reporting requirements. VIEs rose to prominence after the Enron scandal. Some Chinese companies, such as Alibaba, use VIEs to get access to foreign capital that would otherwise not be available due to Chinese government regulations. The use of VIEs by Chinese businesses has received criticism for its lack of transparency.
A share of stock, or a stock certificate, certifies ownership of a portion of a company. In other words, it provides proof of a legal proprietary interest in company assets. In contrast, a VIE share (often mistakenly referred to as a share of stock) certifies ownership of a contractual right to a percentage of a company's profits. Unlike a traditional stock certificate, the VIE share provides a legal proprietary interest in a completely separate company's assets, sometimes referred to as a shell company. The contractual right certified by the VIE share is derived from a contract between (1) the company named on the VIE share and (2) the shell company. In other words, VIE shareholders only have a traditional stock certificate in the completely separate shell company, which is entitled to a percentage of the named company's profits via a private contract.
In order to address this, we (1) created a variable interest entity in BE (Legal Entities), (2) created the concept of a VIE share in SEC Equities. We will complete this on Friday by adding the Chinese ADR that references the VIE share.