Recently it was reported that submitted an application for a secondary listing in Hong Kong in March, but was delayed in getting approval from the Hong Kong Stock Exchange due to user trust shareholding. This raises the question, what exactly is NIO's user trust?

User trust shareholding is a promise made by William Li, the founder, chairman, and CEO of NIO, in his letter to shareholders in the IPO prospectus in August 2018 - to grow with users and make NIO a truly user-centric company.

Li put up one-third of his NIO stock, or 50 million shares, and gave the right to dispose of its earnings to users.

On January 24, 2019, NIO user trust was officially established, which was worth about $328 million at that time.

It was previously reported that Li had planned to announce the formation of the user trust at NIO Day 2018, but was prevented from doing so by the company's legal department.

Citing industry sources, Lime Auto reported on Monday that the issues surrounding the NIO user trust centered on three main points:

Profitability challenges have resulted in NIO being unable to pay dividends in the near future and still relying on financing to maintain operations.

If the N value is calculated according to NIO Points Rule 2.0, new users have a disadvantage compared to previous users in terms of voting weight in trustee elections.

Fairness and equity in the use of trust proceeds are difficult to ensure and convincing.

"The core of the user trust is to enable users to enjoy the benefits of the stock, while creating a user ecosystem. The offline ecosystem is the user base for new car makers, and user trust is just one of the options," Lime Auto quoted CMS China analyst Bai Yiyang as saying.

As for how to address the impact of user trust holdings on NIO's secondary listing in Hong Kong, Bai believes it will require negotiations between the company, its lawyers and the exchange.

"My personal understanding is that this can be solved by some structured products," he said.

NIO submitted its application for a secondary listing in Hong Kong in the third week of March, but it has been more than three months since it was approved by the Hong Kong Stock Exchange, Tencent News reported last Friday.

This is mainly due to NIO's own problems, including user trust shareholdings, the report said, citing people familiar with the matter.

The report did not explain specifically why user trust holdings would affect NIO's listing in Hong Kong. And a later updated version removed the reference to user trusts.