The Innovation Of Legal System Is An Urgent Need For The Internationalization Of Capital Market.

Internationalization, marketization and rule of law are the basic directions for the future development of China's capital market.

At present, with the deepening of China's economic and financial reform, the continuous expansion of opening up and the formal operation of Shanghai and Hong Kong, the internationalization of China's capital market is entering a golden window period.

The internationalization of capital market is not only a simple market opening, but also a series of rules system supported by legal system.

From the point of view of internationalization of rules system, in the process of internationalization of China's capital market, we will face various problems and challenges, and urgently need the innovation, support, guidance and standardization of the legal system.

To this end, I would like to make the following three points.

First of all, improve the market operation mechanism and improve the pparency and effectiveness of market rules.

To a large extent, the internationalization process of capital market is restricted by many factors, such as the scale and efficiency of capital market, the level of supervision and the quality of investors.

Over the years, the continuous capital market system construction, the various legal systems matched with the capital market, the sound organization of the industry rules, the continuous improvement of the market organization system and market structure have basically adapted to the development of internationalization, but there are still some urgent problems to be solved.

The internationalization of China's capital market must first improve the operation mechanism of the capital market and improve the pparency and effectiveness of the relevant rules.

In terms of the issuing system.

We should actively promote the reform of the registration system of stock issuance, strengthen investor demand orientation, take information disclosure as the core, promote the responsibility of all relevant market players to return to their duties, and improve the pparency and efficiency of the market.

In the process of internationalization, we should give full consideration to the differences between domestic and foreign enterprises and the issuing system. We should follow the principles of securities law and make differentiated system design for cross border issuance: first, we should reasonably set out the issuing conditions and procedures, strengthen information disclosure and risk disclosure, clarify the application of accounting standards, establish the principle of fairness in information disclosure and investor protection, and draw lessons from the "well-known mature issuer" system in the United States, which has already been listed on overseas exchanges, and further simplify the issue of application documents and audit procedures.

Two, we should actively study and solve the legal problems of the "variable interest entity (VIE) framework" of red chip companies.

Fully considering the VIE structure, and the existing distribution system related to the possible conflict between the issuer's need for independence in the territory, business and finance, and aiming at the particularity of the VIE structure, we should introduce securities issuance, foreign exchange, foreign investment access and accounting policies to suit its characteristics as soon as possible.

Three, we should actively explore the legitimacy of "dual ownership structure".

We believe that the 131st article of the company law of the people's Republic of China, "the State Council can make separate provisions for the issuance of other types of shares other than the provisions of this Law" issued by the State Council, provides room for the "dual equity structure", and the securities issuance system should respond to information disclosure, voting rights arrangement and the nomination criteria of directors under the new voting structure, such as dual voting rights.

In terms of market access system.

It is necessary to timely assess the market access system, qualification management, quota control and capital entry and exit restrictions of QFII, QDII, RQFII, strategic investors, joint venture brokerages and joint venture fund companies, and gradually open access to securities market investment pactions.

In order to reduce the qualification conditions, increase the quota or the proportion, relax the restrictions on the entry and exit of funds, the second step is to completely eliminate the restrictions on participation subjects, quota and funds.

The specific steps can be combined with the opening up of finance, especially the process of RMB convertibility.

In terms of information disclosure system.

In order to solve the problem that the information disclosure system does not match the international practice, we should increase the disclosure period, formulate more detailed information disclosure requirements, reduce unnecessary suspension, and enhance the timeliness, effectiveness and fairness of information disclosure, so as to better meet the needs of international investors and avoid cross market imbalances caused by differences in information disclosure in internationalization.

Second, strengthen capital market supervision and strengthen international securities regulatory cooperation.

The effective promotion of internationalization of capital market is inseparable from regulation.

In the process of internationalization of the capital market, we should update our regulatory philosophy and methods, and strengthen the supervision of the capital market. We should also strengthen the supervision, cooperation and coordination of international securities, especially the cooperation with financial regulatory bodies and international financial organizations.

In cooperation with overseas regulatory bodies.

With the continuous improvement of China's securities law, the continuous improvement of the market environment and the gradual improvement of the degree of internationalization of the market, the cooperation with overseas regulatory agencies should gradually change the form to the substance and change the substance into a substance greater than form.

First, we should focus on strengthening the supervision of cross border violations, and make feasible rules and institutional arrangements for cross-border case investigation, information notification, service delivery and assistance in implementation.

Two, we should improve cross-border investment protection mechanism as soon as possible.

Bilateral investment protection agreements with major economies such as the United States and the European Union should be reached.

All kinds of obstacles, including the law, encountered by Chinese enterprises in overseas mergers and acquisitions are reduced.

We should accelerate the signing of the bilateral investment protection agreement, incorporate the contents of cross-border securities investment protection, and provide strong legal support for Chinese enterprises' overseas listing, takeover and merger activities.

In terms of multilateral cooperation in international securities regulation.

We should actively promote the establishment of international conventions and agreements by international organizations such as the International Securities Regulatory Commission and the world exchange Federation, so as to solve the conflicts, laws, rules and regulations of listed companies, intermediaries, investors, stock market, bond market, fund market, derivatives market, regulatory bodies, self-discipline management institutions and so on.

Finally, we should attach importance to the conflict of securities law and solve the problem of law application.

The internationalization of capital market will inevitably involve different countries and regions, and different jurisdictions. Due to the different laws and regulations on capital market, how to solve the conflict of laws and the application of law need to be studied in depth.

Here are two main issues.

everything

How to apply.

In the various aspects of securities issuance, listing, trading, settlement and so on, the substantive norms of which domain should be applied urgently need to be solved.

China's current securities law does not stipulate the norms of conflict law.

Although the law applicable to foreign related civil relations has something to do with it, for example, the thirty-ninth provision stipulates that "negotiable securities are applicable to the law of the realization of the rights of negotiable securities or other laws that are most closely related to the securities", which has standardized the conflict of securities law and seems to have solved the problem of law application.

But in practice, different people often have different understanding of "the realization of the right of negotiable securities" and "the law with the most closely related to the securities".

Taking cross border pactions as an example, if investors, commissioned, traded and settled accounts are in different countries, the countries where the "rights to achieve" and "the most closely related" countries are, there may be disputes. Ultimately, judges may need subjective judgments.

This is very difficult to operate for cross-border securities activities which are highly professional, timeliness and complexity.

Therefore, it is necessary to further refine the application of law, solve the conflict of laws and make it operable.

We believe that the applicable conflict rules should be directly specified in accordance with the principle of the most significant relationship and the different types and circumstances of cross-border securities activities.

Specifically, first, issuers issuing securities are applicable to the laws and rules of the place where investors are located; secondly, pactions and settlement activities, laws and regulations applicable to land pactions and clearing place; third: the daily supervision of listed companies, the laws and regulations applicable to listed places; fourth, the daily supervision of securities companies or brokers, and the laws and rules of registration places (the place of issuance of licences).

Two is

How to apply.

After the violation, which country or region's judicial organ, arbitration organ and regulatory body should be dealt with, it involves the extraterritorial effect of the securities law.

From the perspective of international practice, there are disputes about the extraterritorial effect and jurisdiction of the securities law, namely, the "effectiveness standard" and "behavior standard", which are based on the effect of securities activities and act as the basis of jurisdiction.

We believe that the "effect standard" is more definite and has a higher correlation with the interests of the parties. It has gradually gained the acceptance of the major mature market countries, including the United States, and is more in line with the reality of our country.

According to the practice of our country,

"The provisions of this Law shall be applicable to the issuance and trading of stocks, corporate bonds and other securities recognized by the State Council according to law in People's Republic of China."

Although this provision can be expanded to some extent in the "issuance and trading" of the territory, some cross-border securities activities are included, such as the issue of overseas enterprises for overseas investors, but it is not a clear legal provision after all, and it lacks of operability.

We believe that the securities law in our country should clarify the extraterritorial effect and jurisdiction of the securities law according to the "effect standard", that is, stipulate the foreign securities issuance and trading activities. If it damages our national interests, social public interests or investors' interests, it will apply the provisions of China's securities law, and our judicial organs, arbitration institutions and regulatory bodies have jurisdiction.