China's Listed Companies. Conflicts, Governance and Regulation

International Banking and Finance Law Series Volume 25

As in many transition economies, China’s legal infrastructure and enforcement is poor. A weak self-regulatory system and inefficient law enforcement makes it easy for controlling shareholders to manipulate control rights and maximize their own benefit, rather than that of investors.

This new book is the first to address the serious ‘tunneling’ or expropriation of minority shareholders by large shareholders in China’s listed companies.

It analyses the roles of three main interest groups:

• controlling shareholders, who in a weak legal system can abuse control rights by tunneling assets, profits and business opportunities for their own benefits;

• institutional investors, who may be institutional activists or market manipulators;

• minority shareholders, who often suffer from expropriation and tunneling and require access to legal remedies.

Using a law and economics approach, the work sets out the current problems, and offers you solutions. It analyses the types of pervasive misconduct of large shareholders in China’s listed companies, and suggests concrete reform proposals toward effective protection of minority shareholders in the areas of regulation, enforcement, and the judiciary.

These reforms include recognizing the fiduciary duty of controlling shareholders, improving voting rights for minority shareholders, enhancing the disclosure system, and restricting insider trading and market manipulation.

How this book will help you:

• Analyses and describes the current reality of China’s corporate governance – giving you a clear understanding into the ‘why, who and how’ of China’s stock market
• Provides suggestions on how to ‘fix’ the pervasive misconduct existing in China’s stock markets – helping you ensure your clients can maximize their business opportunities

• Helps you recognize the pitfalls and opportunities of investment in China

• Provides practical guidance on the stages needed to build an investor protection-oriented system

• Packed with case studies, interviews and comparative studies to show you how conflict can be reduced

Comprehensive coverage includes:

• The pervasive use of ‘tunnelling’ and misappropriation;

• The state’s continuing involvement in many control transactions, either as a market regulator or as an owner of state-owned assets;

• The special protection given state-owned shares and assets;

• How to develop an investor protection-oriented regulatory system through the integration of legal transplants and indigenous legal resources.

This in-depth analysis will be essential reading for multinational corporate counsel, as well as for anyone interested in Chinese markets – whether from a legal or a business standpoint.