The China Securities Regulatory Commission (CSRC) has asked China's cabinet to clamp down the complex corporate structure used by companies such as Baidu and Sina to list overseas, Reuters quoted four lawyers in China and Hong Kong as saying.

The lawyers said they saw an internal report from the CSRC dated Aug. 17 asking the State Council to act against the structures known as Variable Interest Entities (VIEs), which give non-Chinese investors financial control of companies in industries that limit foreign ownership. The CSRC did not confirm whether or not the report is genuine.

The CSRC has repeatedly stated that it often has no jurisdiction over Chinese companies listed in North America, many of which have used the VIE structure. But the wider impact of fraud cases seen recently at these companies on investor sentiment is putting them under pressure to act.

Sina and Baidu are just two of many Chinese tech firms that have used the corporate structure to list overseas. Paul Gillis, a professor at Peking University, estimates about half of the Chinese companies listed in America use a VIE arrangement, allowing them to circumvent local ownership restrictions.

The structure has drawn intense debate since a recent conflict between Alibaba, a Chinese internet group, and American tech giant Yahoo!, which holds a minority stake in Alibaba through a VIE, after Alibaba transferred its valuable electronic payment business to a local company owned by Jack Ma, Alibaba's chairman.

Under pressure from outraged Yahoo! executives, Alibaba said it had no choice but to comply with foreign ownership restrictions imposed by the Chinese central bank.

China's business press carried the story above on Tuesday.