Alex K. L. Lau

The lawyers’ perceptions on overseas incorporated companies listed in Hong Kong

The phenomenon of the majority of the companies listed in Hong Kong (HK) but incorporated overseas (OLCs) has caused a widespread concern among investors from all over the world as well as the policy makers in HK, the United Kingdom and China. However, no empirical study has attempted to find out why these OLCs did not incorporate in HK. This study aims to investigate this issue. We conducted a survey with a sample of HK lawyers advising OLCs. The results suggest that the main attractions for OLCs to list in HK were the absence of exchange control and its sound legal system. The main objective for these OLCs to list in HK was to raise capital. It is also found that the subjects considered the overall contribution of OLCs towards the success of the HK stock market as more important than the contribution of the Hong Kong Stock Exchange to the success of OLCs. Further, the respondents, on average, seemed to be marginally satisfied with the existing HK laws and regulations governing OLCs. Simplicity in these laws and regulations and the reasonable listing requirements were identified as the two most satisfying areas, whereas transparency was singled out as the most unsatisfying area. The implications of these results are discussed in this paper.

LIFTING THE CORPORATE VEIL IN CHINA: STATUTORY VAGUENESS, SHAREHOLDER IGNORANCE AND CASE PRECEDENTS IN A CIVIL LAW SYSTEM

This article surveys almost 300 court judgments in which shareholders have been sued for corporate debts under Article 20 of the PRC Company Law. The frequency of ‘veil-lifting’ can indicate how much weight is ascribed in China to fundamental corporate law principles such as limited liability, asset partitioning and the separate legal identity of the corporation. Our survey finds that shareholders were found liable for corporate debts in over 75% of cases, a significantly higher rate of veil-lifting than in jurisdictions elsewhere in the world. We challenge previous scholars’ explanations of this phenomenon. We also argue that statutory vagueness has led to unfair and inconsistent veil-lifting judgments in a number of cases. The current interpretative system of Supreme Peoples Court Regulations and Guiding Cases needs modification to ensure that inconsistencies in adjudication are ironed out in a more timely manner.

The new PRC securities law: quality control on the securities market in China

This paper provides an overview of the new Securities Law (“the Law”) of the People’s Republic of China, promulgated at the end of 1998. The analysis will be based on the objective of providing good quality control. The writer will ask whether the Law is sufficiently clear in setting up a securities law system in the PRC. The paper will conclude that the Law falls short of this goal by a considerable margin. This is mainly due to ambiguities in the Law. In addition, inherent characteristics of the PRC legal system also contribute towards this conclusion.