By Peter H. Frank From Capital Watch

The Chinese internet giant said that shareholders would not be affected, except that they would receive American depositary shares in the newly established company.

Sohu.com Inc. announced today its intention to end its incorporation in Delaware and convert to a Cayman Islands-based company.

The Chinese internet giant said that shareholders would not be affected, except that they would receive American depositary shares in the newly established company, Sohu.com Ltd., to replace their existing shares in Sohu.com Inc. Sohu said it anticipated the new ADSs would be listed on the Nasdaq Global Select Market.

“The business, operations, and assets of the Sohu Group, which currently consists of the Registrant and its subsidiaries and variable interest entities, will be substantially the same” the company said.

Shares in Sohu.com Inc. (Nasdaq: SOHU) closed today $32.88, up more than 6 percent, or $1.96 per share.

While the company gave no reason for the proposed change in incorporation, the new structure would allow Sohu, like other Cayman-based companies with ADSs, to also sell the newly proposed Chinese depositary shares on the Shanghai exchange.

A number of companies, including Alibaba Group Holding Ltd. (NYSE:BABA), have been reportedly responding positively to government efforts in China to attract more domestic tech companies to be listed on Chinese exchanges, whether directly or through CDSs.

Sohu’s board said it would call a special meeting of stockholders to vote on the current proposal. No timetable was given for the meeting or the corporate conversion.

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