Xiaohongshu is facing scrutiny over any potential Hong Kong listing after a former employee challenged its corporate structure, Reuters reported Tuesday.
The Chinese social media platform has also hired advisors for a potential initial public offering, the report said, citing sources.
The complaint, filed with Hong Kong's stock exchange, questions the company's use of a variable interest entity (VIE) structure following a dispute over share-based compensation, according to the report.
The former employee reportedly argued Xiaohongshu treated its mainland and offshore entities as separate when rejecting his stock option claims, despite VIE arrangements relying on contractual control between the two.
Xiaohongshu did not immediately respond to' request for comment.
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