Chinese corporate and securities law
2007-8 AY: Semester II
School of Law
The Chinese University of Hong Kong
3 August 2007
This course is to provide an Introduction to China’s business organization regimes and capital markets regulations. It covers the major aspects of company law and securities regulation in China, including the formation of companies, corporate finance, corporate governance, shareholders’ rights, issuing of stocks and “going public”, corporate mergers and acquisitions, as well as the regulation of the capital markets in China. The primary focus will be on providing students with a basic legal understanding of establishing business organizations in China and accessing China’s capital markets for finance. Significant issues relating to corporate law and securities regulation will be discussed in the context of China’s legal, business and policy environments in the reform era.
Readings for this course will be the handouts, articles, and statutes provided by the lecturer. This is largely because the PRC Company Law and PRC Securities Law were recently revised in October 2005 and, as such, there are no up-to-date textbooks in the marketplace. The following readings are recommended.
- Wang, Jiangyu, “Overview of the Chinese Company Law”
- CCH Asia, China Company Law Guide, Volume 1 (The Hague: Kluwer Law International, 2005)
- Shahid Yusuf, Kaoru Nabeshima , and Dwight H. Perkings, Under New Ownership: Privatizing China’s State-owned Enterprises (co-publication of Stanford University Press and the World Bank, 2006)
- Howie, Fraser J.T. and Carl E. Walter, Privatizing China: Inside China’s Stock Markets (2nd edition) (John Wiley & Sons, 2006)
- Wu, Jinglian, Understanding and Interpreting Chinese Economic Reform (Ohio: Thomson/South-Western, 2005)
- Green, Stephen, China’s Stock Market (London: The Economist, 2003)
- Brahm, Laurence J., China’s Century: The Awakening of the Next Economic Powerhouse (John Wiley & Sons, 2001)
- Wang, Jiangyu, “Dancing with Wolves: Regulation and Deregulation of Foreign Investment in China’s Stock Market”, (2004) 5 Asian-Pacific Law & Policy Journal 1-61.
- Tan, Lay-Hong and Jiangyu Wang, “Corporate Governance in China’s State-owned Listed Companies”, (2007) 7 Journal of Corporate Law Studies 143-183
CONTENTS OF THE COURSE
The Economic, Policy and Legal Background of Company Law and Securities Regulation in China
- The historical and policy evolution of enterprise reform and corporatisation in China
- The legal framework of business organizations in China
- The legal framework of PRC company law
- The Regulatory authorities of companies and securities markets
- Understand business management in China from the cultural perspective
- Incorporation of limited liability companies (LLC)
- Incorporation of joint stock companies (JSC)
- Ultra Vires and Piercing the corporate veil
- Some legal issues in the incorporation of foreign invested enterprises (FIEs): foreign invested limited liability companies and joint stock companies
- Corporate structure and governance in limited liability companies
- Corporate structure and governance in listed companies
- Corporate governance issues in foreign invested enterprises (FIEs)
- Shareholders’ rights and legal actions
Legal Aspects of Corporate Shares
- The issuance of shares by joint stock companies
- The different class of shares: A shares, B shares, and H shares
- Disposal, including transfer of corporate shares
- Obligations of corporate officers in relation to corporate shares
Going Public: Listing of Joint Stock Companies in Stock
- Initial public offerings (IPOs)
- Regulation of stock exchanges
Disclosure of Corporate Information
- Disclosure during the IPO
- Continuous disclosure obligations of listed companies
Market Manipulation and Insider Trading
- Rules against market manipulation
- Insider Trading
Corporate Restructuring, including Mergers and Acquisitions
- Corporate restructuring in general
- foreign related mergers and acquisitions in China
Judicial Protection of Shareholders’ rights: Shareholders’
- Requirements for bring shareholders’ suits
The course will be taught in the form of seminars. Nine intensive seminars will be offered during the course of three weeks.
To certain degree the Socratic Method will be exploited. Extensive lectures will be given in class but students are generally expected to answer questions and engage in robust discussions during the class sessions.
MODE OF ASSESSMENT
There will be one final take-home examination (comprising 90% of the consolidated marks) and class performance grade (comprising 10% of the consolidated marks).
Students are expected to participate actively during the seminars. This, of course, would require them to read the reading assignments before class. Class performance will be graded on the student presentations and individual contributions to the discussions during the entire course. Class performance will be grading taking into account factors such as concision, creativity and clarity.