International Journal of Law and Management

A brief analysis of the defects and countermeasures of the independent director system in China : Table of Contents

Niu Yuan — Sun Jul 19 14:15:06 BST 2009

Abstract:
Purpose – China adopted an independent director system in 1997 in order to perfect company management structure in the country. The purpose of this paper is to assess the effectiveness of that system. Design/methodology/approach – This paper starts from the current status of the independent director system in the country and gives comments on the independent nature and designation procedure of the independent directors, rationalization of the incentive system and completion of responsibility mechanism. Findings – The unique function of the independent director system plays a decisive role in preventing control by people within a public company, minimizing power abuse by shareholders and best maintaining the interests of medium and small shareholders. But there still exists certain shortcomings in independent director system in China such as unclear of the independence nature, irrationality of designation method, incomplete incentive system and short of relative responsibility mechanism which restrict independent director system to be brought into full play. Originality/value – Management of a company is always a hot topic in the company law and an independent director system is a very important aspect. On the basis of learning from advanced experience from the western world, China imported the independent director system to improve the management system of its companies. This paper analyses defects of the current independent director system in China and puts forward improvement measures.

The research on the problems of CEOs’ legal status and legal liability : Table of Contents

Li Zhi — Sun Jul 19 14:15:06 BST 2009

Abstract:
Purpose – The importance of CEOs (chief executive officers) is not to be underestimated and this paper seeks to identify the problems in law of definition and thus liability of CEOs. Design/methodology/approach – This paper draws upon the legislative and judicial experiences of China and compares them to those of the USA. Findings – Since an owner and a manager become “the principal-agent relationship” in the enterprise, the manager's “moral venture question” is inevitable. With the development of corporate governance structure, CEOs appear, thus people begin to take care of CEOs’ legal status and legal liability. A CEO has not only a manager's authority of office, but also some part of authorities of board of directors and president, so a CEO's legal position is higher than that of a manager. Because the questions caused by CEOs are increasing, it is necessary for us to draw lessons from American Corporate Law Reform, to revise our Corporate Law, to make definite CEOs’ legal status and to strengthen CEOs’ legal liability. Originality/value – The findings will hopefully influence reform and development in this area in China.

A comparative study on capital system across the Taiwan straits : Table of Contents

Ni Cailong, Ni Wenzhu — Sun Jul 19 14:15:06 BST 2009

Abstract:
Purpose – The purpose of this paper is to compare the capital system and governance of Mainland Chain with that of Taiwan. Design/methodology/approach – This a comparative study drawing upon the main principles of the legal systems of China and Taiwan. Findings – Due to historical, institutional social factors, the capital system of the Mainland China differs greatly from that of Taiwan. There is room for both sides across the Taiwan Straits to learn from each other by taking into consideration the respective features and deficiencies of their regulations. Originality/value – The comparison and contrast study of the two capital systems helps them to improve respectively and boost economic development as well as legal construction.

Minority shareholders and corporate governance: Reflections on the derivative action in the UK, the USA and in China : Table of Contents

James Kirkbride, Steve Letza, Clive Smallman — Sun Jul 19 14:15:06 BST 2009

Abstract:
Purpose – The purpose of this paper is to compare the response in the UK, the USA and China to the need to provide effective protection in law to disgruntled minority shareholders. Design/methodology/approach – The study draws upon official comment and case law across the three jurisdictions in order to assess the scope and availability of minority actions. Findings – The importance of shareholder rights through alternative actions is an important aspect of controlling the behaviour and actions of the Board of Directors and an important part of corporate governance. This paper seeks to compare the development and scope of derivative rights in the UK, the USA and in China and provides an assessment and insight into the differences in approach and in the political and legal structures with the consequent likely impact on the role and contribution of derivative claims in the control and governance of Boards in the different jurisdictions. Originality/value – The study should prove of interest to scholars of comparative corporate law.

The characteristics and enlightenment of legislation on financial privacy protection in the USA : Table of Contents

Chen Jianping, Yang Zhongwei — Sun Jul 19 14:15:06 BST 2009

Abstract:
Purpose – The purpose of this paper is to examine the extent to which financial privacy is present and necessary in dealings between banks and clients in China. Design/methodology/approach – This paper provides a comparative study drawing, in particular, on developments in the USA. Findings – It is a trend in legislation in the western developed countries that the right to privacy is taken seriously and private information in the financial activities is protected by law. The legislation in the USA is typically systematic and complete. The fact that financial privacy protection is sparsely stipulated in finance or administrative laws but the protection of privacy has yet not been systematically written into law in China so far, which is inconsistent with the current situations of the financial industry. China should deal with the relationship between banks and clients, administrative power and personal rights, judicial interpretation and legislation from the aspect of financial practice, so as to set up the legal system to protect financial privacy by learning from the legislation in the USA based on the national conditions. Originality/value – The paper provides a systematic view of the value of financial privacy in the modern world, with recommendations for reform in China.

Alternation of legislation of foreign investment in China: Response to legislation cooperation of international investment : Table of Contents

Li Ben — Sun Jul 19 14:15:06 BST 2009

Abstract:
Purpose –This paper seeks to assess the extent to which China has both encouraged and achieved growth through foreign investment. Design/methodology/approach – This paper provides an examination of the incentives developed and deployed and seeks to assess evidence of their performance. Findings – “Market Economic” development of legislation of foreign investment in China has significant meanings toward promotion of Chinese economy. Since the basic policies of reform and opening coming into force in China in 1970s, China has adopted the opening, welcoming and incentive attitudes for foreign investment, making the positive activities acclimating to economic development rules to achieve the win-win results all around the world. Investment in China by foreign investors has been initially carried out by “enterprises with foreign investment”, which always turned out to be the cooperative or independent direct investment basing on the funds. During the recent years, China has become the second country (only behind of USA) which absorbs the most direct foreign investment in the world. FDI has played an important role in the Chinese economic development. Correspondingly, the legislation for foreign investment in China has gradually been improved and perfected and has protected and enhanced the foreign investment and economic development. Viewing the alternation of legislation of foreign investment in China, it has fully embodied the corresponding to the global and regional international investment legislation cooperation. Originality/value – This study will be of interest to those seeking an “insider's” view on the success or otherwise of foreign direct investment strategies in China.