Variable Interest Entities
A variable interest entity (VIE) refers to a legal business structure in which an investor has a controlling interest despite not having a majority of voting rights. This is because the controlling interest is arranged via a contractual relationship rather than direct ownership. Characteristics include a structure where equity investors do not have sufficient resources to support the ongoing operating needs of the business. In most cases, the VIE is used to protect the business from creditors or legal action.A business that is the primary beneficiary of a VIE must disclose the holdings of that entity as part of its consolidated balance sheet.