The boomerang of Xiaohongshu (RED) has finally hit itself

Three years ago, Xiaohongshu dismissed its South China Sales Head. His performance was normal, but he was laid off just before his options were about to vest.
Since Xiaohongshu uses a VIE structure, employees receive salaries through the domestic company, but options are tied to an overseas shell company.
Chen Hao filed two lawsuits: one for labor arbitration and one for options. The arbitration ruled that Xiaohongshu’s layoff was illegal, awarding several hundred thousand yuan in compensation. However, in the options case, the company refused to pay, arguing that the options belonged to the overseas entity and had nothing to do with the domestic operating company.
Coinciding with Xiaohongshu’s Hong Kong IPO filing, Chen Hao submitted a court judgment to the Hong Kong Stock Exchange (HKEX), reporting contradictions in the disclosure of its VIE structure: during the IPO, the company claimed that the domestic and overseas entities were highly interdependent, but during the lawsuit, it separated their connection.
This ultimately led to the postponement of Xiaohongshu’s IPO.
#Xiaohongshu's boomerang has finally hit itself
#港股 #IPO