Welcome the new Global Academic Fellow Dr Alex Zhicheng Huang!

Welcome to Dr Alex Zhicheng Huang who joined the Faculty of Law as a Global Academic Fellow. Dr Alex Huang’s research focuses on bankruptcy law, corporate law, judicial behavior, and the application of economics and data science to legal questions. His current projects involve the use of network analysis and natural language processing to examine a large number of judicial opinions related to Chapter 11 reorganization. He explores computational doctrinal analysis to examines the content of law—legal reasoning and justification—in an empirical way. Computational doctrinal analysis sets itself apart from both the outcome-oriented empirical legal studies and the case study-driven doctrinal analysis. Additionally, he is interested in the role of courts, judicial performance evaluation, and public trust in the judiciary, particularly the impacts of new technologies like artificial intelligence on these fields.

His writings have appeared in the Emory Bankruptcy Developments Journal and Research of Institutional Economics, and he has contributed chapters to several books. His research has been featured in several media outlets and academic blogs including the Financial Times, The Deal, Reorg, Oxford Business Law Blog, and Harvard Law School Bankruptcy Roundtable. He has received several research awards, including the Best Paper Award at the Annual Law and Economics Conference in China and the Most Innovative Presentation Award at the INSOL ERA Annual Workshop.

Dr Alex Huang holds a JSD and LLM from the University of California, Berkeley, where he was named to the Dean’s List. He was also a Lloyd M. Robbins Fellow at the Berkeley School of Law and a Berkeley Empirical Legal Studies Fellow at the Berkeley Center for the Study of Law and Society. He earned his Bachelor of Laws from Sun Yat-sen University, where he received the China National Scholarship.

Before teaching Cross-border Insolvency Law at HKU Law, he taught Law and Economics I & II, Sociology of Law, Law in Chinese Society, and Fundamentals of U.S. Law as a lecturer and graduate student instructor in the legal studies program and the law school at UC Berkeley.

Huang is also a Research Associate at the Sun Yat-sen University Law and Economics Research Center, where he serves as a co-investigator for a key project funded by the National Social Science Fund of China.

Stefan Lo on Corporate Governance in the Context of Insolvent Companies (Journal of International and Comparative Law)

"Corporate Governance in the Context of Insolvent Companies"

Stefan Lo

Journal of International and Comparative Law, Volume 10, Issue 1

Published: June 2023

Abstract: Corporate governance has been for many years an important aspect of company law attracting much academic interest. The extensive literature on corporate governance has not often dealt with insolvent companies. Yet governance remains critical for both financially distressed companies which have not yet entered into formal insolvency proceedings and insolvent companies which are subject to formal insolvency proceedings. This article looks at particular aspects of governance involving the board of directors in the former scenario and insolvency office-holders in the latter. It surveys the law and practice relating to distressed or insolvent companies, from the time before actual insolvency through to the time of insolvency proceedings. This is done through a review of Keay, Walton and Curl’s Corporate Governance and Insolvency: Accountability and Transparency.

New Book by Jin Sheng (PhD 2010, AIIFL Honorary Fellow) : Alternative Development Finance and Parallel Development Strategies in the Asia-Pacific: Racing for Development Hegemony? (Edward Elgar Publishing)

Alternative Development Finance and Parallel Development Strategies in the Asia-Pacific: Racing for Development Hegemony?
Asian Commercial, Financial and Economic Law and Policy series
Jin Sheng (PhD 2010, AIIFL Honorary Fellow) 

Edward Elgar Publishing

Published on 15 June 2021

Book Description: This insightful book examines the impact of two competing visions of Asian-Pacific economic growth paths and development governance. It discusses law, development and finance in the context of the Indo-Pacific Strategy versus the Belt and Road Initiative (BRI), whilst also comparing parallel development financing systems.

Syren Johnstone and Frederick Long on Environment and Governance: HKEX Guidance and Consultation (HK Lawyer)

"Environment and Governance: HKEX Guidance and Consultation"

Syren Johnstone and Frederick J. Long

Hong Kong Lawyer

September 2020

On 24 July 2020, HKEX announced two important initiatives. The first moves toward resolving a shortcoming in the regime for new listing applicants. The second aspires to improve Hong Kong’s environmental practices via a paperless listing regime. Both reflect a continuation of the environmental global leadership HKEX has shown, the most recent initiative being HKEX’s Sustainable and Green Exchange - STAGE. While both proposals set a directionally positive tone, there are some devils in the details.

Updated Guidance for New Listing Applicants

To date, it has been an anomaly that a listing applicant is not required to make disclosures in their listing documents as to their practices or standards regarding corporate governance (CG) or environmental, social and governance (ESG) (save in relation to certain conflicts of interests). This anomaly was the subject of recommendation C4.7.1 of the HKICPA’s Report on Improving Corporate 

     Governance in Hong Kong (December 2017). It proposed the listing applicant be required to make a statement about its CG practices in the prospectus in view of the listing rule (LR) provisions it will be subject to upon being listed. There is a strong argument that CG and ESG standards would be fostered, and investors better informed, by requiring a listing applicant to consider and disclose its practices prior to listing being granted. 

     Updated Guidance Letter HKEX-GL86-16 now requires applicants to have in place mechanisms that put them in compliance with CG and ESG “requirements” upon listing. Given that many provisions in LR Appendices 14 (re CG) and 27 (re ESG) are merely “comply or explain” not mandatory requirements, the guidance falls short of the more comprehensive progress envisaged by recommendation C4.7.1. In particular, it does not appear to procure “explain” disclosures that would deliver more meaningful information increasingly expected by responsible investors. More remains to be done.

A Paperless Listing Document and Subscription Regime

Despite international acceptance among regulators that electronic access equals delivery, Hong Kong’s penchant for printed prospectuses is environmentally wasteful and unnecessary. The present authors suggested in an earlier edition of this journal that Hong Kong already has a paperless prospectus regime that nevertheless needs modernising to properly accommodate electronic public offering and application processes (Hong Kong’s Paperless Prospectus Law, January 2020).

     One key hurdle is the Companies (Winding-up and Miscellaneous Provisions) Ordinance (Cap. 32) (CWUMPO), which prohibits a form of  application being issued otherwise than being “issued with a prospectus”. Per the SFC/HKEX 2010 Joint Consultation Conclusions, this is “commonly interpreted” as requiring a paper-based application form to be accompanied by a printed prospectus. An avenue for electronic prospectuses and printed application forms was subsequently provided by the Mixed Media Offering (MMO) introduced in 2010. Although a wholly paperless offering is possible under CWUMPO, Alibaba’s secondary listing in November 2019 took place subject to waivers from LR that posed uncertainties regarding printing requirements (see Hong Kong’s Paperless Prospectus Law, January 2020). 

     The HKEX Consultation Paper seeks to facilitate electronic-only offerings by proposing (i) the LR require listing documents to be published "solely in an online environment and cease printed form", and (ii) new listing subscriptions are “to be made through electronic channels only” (except MMOs). Item (i) envisages the LR being amended to recognise only electronic listing documents. HKEX expects CWUMPO’s prohibitions will deliver item (ii) – while the Exchange is statutorily empowered to make rules covering applications for the listing of securities, that does not appear to extend to matters concerning the offering of and application for securities. However, the proposal synchronises poorly with the law. Public offers are regulated by CWUMPO, which is silent, ie permissive save for the prohibition already noted, as to the medium of a prospectus or application form. Since the proposed changes to the LR have no bearing on the provisions of CWUMPO, listing applicants would in theory remain free to bulk-print a CWUMPO-compliant IPO prospectus and submit an online listing document cum prospectus to the Exchange. Futther, the CWUMPO prohibition applies to the issue of application forms, not vice versa, suggesting electronic subscription may also remain possible. 

     While such an outcome may seem absurd, and frustrates the intent of the proposal, the failure of the MMO to cause a shift away from bulk-printing prospectuses could be prognostic: will the proposed LR changes be sufficient to alter a cultural preference for printed prospectuses? Listing applicants and underwriters may be reluctant to tamper with customary IPO practices that have proven successful if they still have a choice when, commercially, environmental responsibility is typically a secondary consideration.

     To the extent the proposed changes to the LR, which are non-statutory and operate by way of contract, seek to remove the printed medium (albeit falling short of guaranteeing that outcome) they could be construed as an improper attempt to in practice negate what is legally permitted under CWUMPO. If so, it might cause difficulties for the SFC to approve the rule change having regard to its statutory responsibilities.

    For these reasons, the Consultation Paper may have overshot the mark by seeking to “outlaw” a printed option and going beyond international standards that enable, not restrict. Why not undertake a less ambitious clarification of the LR that simply removes the need for waivers? Absent a change in the permissive and media-neutral laws currently enjoyed by Hong Kong, re-aligning endemic practices and preferences with environmental aspirations may rely on regulators providing stronger incentives. A little pushing at the envelope of regulation may nevertheless be necessary to help practices modernise, and to lead. 

A fuller discussion of the above and other issues is provided in our Submission to the Consultation, which can be found at the author’s page at SSRN.com/ abstract=3670542.

Joint Submission to HKEX's July 2020 Consultation Paper on Paperless Listing 

Syren Johnstone, Faculty of Law, University of Hong Kong; Asian Institute of International Financial Law
Frederick J. Long, Olympus Capital Asia, Hong Kong
Date Written: September 1, 2020 

Abstract On 24 July 2020, HKEX announced two important initiatives. The first moves toward resolving a shortcoming in the regime for new listing applicants. The second aspires to improve Hong Kong’s environmental practices via a paperless listing regime. While both proposals set a directionally positive tone, there are some devils in the details. The first represents a small step with more to be done to implement recommendations made in a report by the HKICPA in December 2017. The second synchronises poorly with the law, may not bring about the desired outcome and may have overshot the mark as to what could have been more simply done.

On 18 December 2020, the HKEX released its Consultation Conclusions in a document titled "Proposals to Introduce a Paperless Listing & Subscription Regime, Online Display of Documents and Reduction of the Types of Documents on Display".  The document cited and quoted extensively from Johnstone and Long's Joint Submission (at paras 129-130, 132-134, 136 & 138) and approved of their arguments to move towards a paperless regime.

Michael and Goo on the Panama Papers and Corporate Governance Reform in Hong Kong (Tsinghua China LR)

"What Do the Panama Papers Teach Us about the Administrative Law of Corporate Governance Reform in Hong Kong?"
Bryane Michael and Say Goo
Tsinghua China Law Review
2019, Volume 11, Number 2, pp. 370- 413

Abstract: A complex business environment calls for a flexible administrative law for the agencies that oversee corporations. Nowhere illustrates this maxim better than Hong Kong, and its need to reform corporate regulations after the Panama Papers revelations. We describe how only a “non-administrative” administrative law can best cope with the challenges facing the regulation of corporate governance. Such a flexible, results-oriented approach to administrative law develops new principles and tests, rather than gives civil servants instructions. Such an approach to corporate governance can facilitate the assessment of company governance, corporate disclosure, the self-regulation of professional groups like lawyers and accountants, as well as ensure corporations engage in “legitimate economic purposes.” We engage with the literature, showing why such a flexible approach to administrative rulemaking would more likely reduce some of the government regulation and oversight problems exposed by the Panama Papers than previous approaches toward drafting and implementing administrative law (at least in this area).  Click here to download the full article.

Xianchu Zhang on Integration of CCP Leadership with Corporate Governance (China Perspectives)

"Integration of CCP Leadership with Corporate Governance: Leading Role or Dismemberment?"

Xianchu Zhang

China Perspectives

2019, Issue 1, pp 55-63

Abstract: Since 2018, a political campaign to integrate leadership by the Communist Party as the core force in corporate governance in China has reversed the course of market reform in the past 40 years, which was predicated on separation of the Party’s political functions from company business operations. This article critically reviews the trend of developments from a historical perspective and analyses the impact of the political campaign on China’s socialist market economy and rule of law conditions. Some institutional implications are also examined in the comparative context with reference to the OECD Corporate Principles. The major argument of this article is that enhancing the Party’s leadership in companies will negatively affect development of the market economy and rule of law as well as China’s attempt to create an innovative society for its economic upgrading.

Syren Johnstone on Improving Corporate Governance in Asia (IFLR)

"COVER STORY: Asia raises the bar"
International Financial Law Review (IFLR)
28 Aug 2018
Asia is improving corporate governance. But some companies aren’t jumping at the opportunity.

Market success hinges on many things, not least strong corporate governance standards. As Asian

markets open up to foreign investment, the need for tougher governance is encouraging reform in financial centres across Asia. On the one hand, Asian businesses are facing pressure as domestic investors who have historically been passive when it comes to their investments become more

engaged. On the other, foreign investors expanding their portfolios into Asia look for more transparency and accountability.

    But cronyism is a common feature in family-owned businesses, and the separation of ownership and management is an aspect Asian businesses still need to work on. Figures show that 85% of Asian businesses are family-owned, and out of the world's largest 500 family- owned businesses, nearly 20% are located in the region.

     Recent regulatory changes in a number of Asian countries have tried to target this issue though much more work is needed.

... 

     Syren Johnstone, executive director of the LLM in compliance & regulation at the University of Hong Kong, and the principal author of the HKICPA report along with Say Goo, professor of law at the University of Hong Kong, says progress in this market has focused less on truly innovative changes and more on creeping changes to existing codes. Other areas of progressive change have focused on the role of the industry regulator in relation to the listed market, and an increasing willingness to consider stronger means of enforcement such as through the courts.

     "In the HKICPA report, we have queried the extent to which this succeeds in moving fundamental behaviours away from box-ticking compliance, and have made a series of recommendations we consider will be more effective and efficient," says Johnstone. "The most notable change affecting governance regulation is of course Hong Kong permitting weighted voting rights, subject to some safeguards, though it's too early to tell whether those safeguards will be adequate." 

     Other than the enforcement problem, which is a system design issue, the two biggest issues remain the role of INEDs and abuse by controlling shareholders. "How well the independent director concept really works in Asia, given the different context from its point of origin in the US, remains uncertain," explains Johnstone. "There is a growing recognition that an INED's understanding of their expected role and perception of liability, and their remuneration, need to be better aligned for the concept to have a chance of working properly."

     There have been suggestions that the approach in the UK to empower INEDs should be followed, ie through dual voting and the requirement that the controlling shareholder enters into a relationship agreement that gives INEDs special powers. The HKICPA analysis considered the different mechanisms by which independence is determined or understood, the justification for altering the voting rights attached to shares, and concluded that there are more appropriate mechanisms for empowering the INED concept. Click here to register to read the full text.

Johnstone & Goo Report on Improving Corporate Governance in Hong Kong (HKICPA)

"Report on Improving Corporate Governance in Hong Kong: A Comparative Based Study"

Syren Johnstone and Say Goo

Hong Kong Institute of Certified Public Accountants (HKICPA)

May 2018, 705 pp

Introduction (Executive Summary)

Hong Kong’s emergence as a global financial centre has brought far greater attention to its role in the global market place and the standards it engages as compared to other leading global centres. Markets compete on a range of factors, amongst which the corporate governance (CG) system is of particular importance because it impacts on market integrity, and hence market success. Where the affairs of publicly listed companies are undertaken in a way that fall short of expected CG standards, or where the mechanisms of control and redress are inadequate to curb misbehaviour, confidence in the market may be damaged, and the market becomes less efficient. CG is therefore an integral part of a market that a CG system must serve. 

     This Report was commissioned by the Hong Kong Institute of Certified Public Accountants (HKICPA) to make recommendations on how Hong Kong’s CG system may be further developed to improve the long-term competitiveness of the Hong Kong public market. The recommendations are to be based on an independent, comparative study of shareholder rights, remedies and protections and board processes within the context of public listed companies. As many listed issuers are not incorporated in Hong Kong this presents special issues as regards standard setting and enforcement. 

     To assess the strengths and weaknesses of Hong Kong’s CG system in the global context, this study investigated the CG system in Hong Kong and each of the United Kingdom (UK), the United States, Mainland China and Singapore. The CG system in each of these jurisdictions has undergone developments and experiences, successes and failures that are shaped by its historical, political, legal, market, and social and cultural contexts. The different influences of these factors are important to recognize for the purposes of forming recommendations within a Hong Kong framework – what works, or fails, in one jurisdiction might fail, or work, in another. 

     The comparative analysis undertaken in this Report has led to a total of 28 recommendations being put forward. Reflecting one of the guiding concepts of this study to produce practical and implementable recommendations, only two require a change to legislation, with another four possibly requiring legislative change subject to the outcome of a further consultative process. All recommendations are consistent with overarching objectives of fostering competition and regulatory efficiency. 

     The remainder of this Part I of the Executive Summary provides an overview of the study’s main findings. Part II outlines each recommendation made and provides a summary Table of all recommendations found in Section 4 of this Report. Part III summarizes the approach taken to the topic of CG and the formation of recommendations. Part IV summarizes the analysis that gives rise to the 28 recommendations via an abridged text of the detailed analysis found in Section 3 of this Report...

     For media coverage of this Report, see SCMP and CFO Innovations. To download the full report, click here.

Bryane Michael & Say Goo Corporate Governance Regulatory Reform in Hong Kong (Business Law Review)

"What Does Corporate Governance Regulation in Hong Kong Teach Us About Incremental Legal Change?" 

Bryane Michael & Say Goo
Business Law Review
2017, Vol. 38, Issue 3, pp. 89-100

Abstract: Why does regulatory change occur much more slowly in some jurisdictions than in others? In this article, we look at the gradualist pace of Hong Kong’s corporate governance-related regulatory reform – particularly with regard to shareholder protection. We extend the concept of ‘legal transactions costs’ to explain such slow change. Costs of learning, experimenting and satisfying various constituencies about the advantages to their own interests of such reform represent some of these legal transactions costs. We describe how such legal transactions costs have worked against the creation of a minority shareholders’ association, the professionalization of board-directorships and the incorporation of soft law provisions in the Hong Kong Stock Exchange’s Listing Rules into hard law. We describe what the end result of such reform might look like – to assess the gap between current and possibly reformed corporate governance.

Say Goo's Economic Efficiency Approach to Reforming Corporate Governance (Asian J L & Soc)

"An Economic Efficiency Approach to Reforming Corporate Governance: The Case of Multiple Stakeholder Boards"

Say Goo
Asian Journal of Law and Society
July 2017, published online, pp 1-18

Abstract: This paper points out the problems of the current law on directors’ duties that forces directors to ignore stakeholder interests, with the unintended consequences of misallocation of resources and the weaknesses of a traditional legal approach to law reform, and uses multiple stakeholder boards as an example to demonstrate how an economic efficiency approach to law reform, adopting economic principles, could avoid some of the unintended consequences of a legal approach to law reform and help design better rules that promote allocative efficiency for the benefit of society as a whole. It argues that international organizations should take the lead in promoting the use of stakeholder directors in the board of directors of multinational corporations that have a history of corporate abuses for corporate decisions that have an impact on all stakeholders.

New Scholarship from Bryane Michael (AIIFL Fellow)

1. The Optimal Design of the Qianhai Special Economic Zone

This paper discusses changes to Qianhai's and Hong Kong's regulations necessary to make Qianhai a pre-eminent financial centre. We conduct econometric analyses which show that regulatory reform could increase innovative companies' profits by a factor of 10 over the long-term.

https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=2907608

2. Hong Kong's Corporate Governance Rules, Lessons from the Panama Papers and Hong Kong's effect on Changing China's Corporate Governance

This paper describes the changes to Hong Kong's law needed to improve profitable corporate governance reform at home and on the Mainland. We show that the adoption of these standards could increase market valuations by 7%. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2914865

3. The Problems and Prospects for an IGAD Development Bank

The IGAD region, covering most of East Africa, represents a challenging area for investment in the best of times. The paper argues for a new design for multi-lateral development financial institutions -- one which focuses on securitisation and less sovereign involvement.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2790661

4. A Theory of Compliance Regulation

This paper looks at the way financial institutions should organise their compliance functions. We create a database of legal complexity of banking regulations around the world and show that increased regulation may promote banking productivity.

https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=2563981

5. Regulations Determine an M&A Centre's Success

Legal complexity can actually help a financial centre attract more M&A business from places like China. This paper shows the extent to which international law firms and financial advisors have benefited (or not) from their jurisdictions' legal rules.

https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=2607348

6. SCMP's Letter of the Law

Abstract legal theory can be used in the real world. Roughly each month, I look at the deep legal principles driving law enforcement and business in Hong Kong.

http://www.scmp.com/author/bryane-michael

7. Law and Economics Video Series

Are you too lazy to read academic papers? This YouTube Channel presents the main ideas from legal theory and practice in Hong Kong -- in a graphic and common language way.

https://www.youtube.com/user/lawandeconomics1

8. The Law and Economics Podcast

Too busy to watch a video? Why not subscribe to the podcast version? As new videos about legal theory and practice appear, this podcast makes the content available to anyone with a iPod.

https://soundcloud.com/infographicinstant

New Issues: SSRN Legal Studies Research Paper Series (HKU)

Vol. 6, No. 4: 26 Aug 2016

Table of Contents

1. A Public Law Conception of Integrity in the Criminal Process
Simon N. M. Young, The University of Hong Kong - Faculty of Law

2. A Red Flag for Hong Kong Credit Ratings
Syren Johnstone, Faculty of Law, University of Hong Kong, Asian Institute of International Financial Law

3. Re-Examining Criminal Process Through the Lens of Integrity
Paul Roberts, University of Nottingham, University of New South Wales (UNSW) - Faculty of Law, China University of Political Science and Law
Jill Hunter, University of New South Wales (UNSW)
Simon N. M. Young, The University of Hong Kong - Faculty of Law
David Dixon, University of New South Wales (UNSW) - Faculty of Law

4. Voice and Exit as Accountability Mechanisms: Can Foot-Voting Be Made Safe for the Chinese Communist Party?
Roderick M. Hills, Jr., New York University School of Law
Shitong Qiao, University of Hong Kong Faculty of Law

Vol. 6, No. 3: 26 July 2016

Table of Contents

1. Bringing Politics Back In: Access to Justice and Labor Dispute Resolution in China
Fu Hualing, The University of Hong Kong - Faculty of Law

2. Interlocutory Injunction, Freedom of the Press and Public Interest: The University of Hong Kong v Hong Kong Commercial Broadcasting Co Ltd and ORS.
Anne S. Y. Cheung, The University of Hong Kong - Faculty of Law

Vol. 6, No. 2: 16 June 2016

Table of Contents

1. Live Migration in Emerging Cloud Paradigms
Massimo Ficco, Second University of Naples
Christian Esposito, University of Salerno
Henry Chang, The University of Hong Kong - Law and Technology Centre
Kim-Kwang Raymond Choo, The University of Texas at San Antonio

2. The Chinese Approach to Transfer Pricing: Problems Faced and Paths to Improvement
Jingyi Wang, The University of Hong Kong

3. Disproportionality in Asset Recovery: Recent Cases in the United Kingdom and Hong Kong
Simon N. M. Young, The University of Hong Kong - Faculty of Law

New Issue of Hong Kong Law Journal (Part 1 of 2016)

Hong Kong Law Journal

Vol. 46, Part 1 of 2016

Editor-in-Chief: Professor Rick Glofcheski

Associate Editor: Professor Albert Chen

Table of Contents

Focus: The Life and Future of British Colonial Sexual Regulation in Asia
Preface Lynette J Chua and Michael Hor	1
Trans* Individuals and Normative Masculinity in British India and Contemporary Pakistan Shahnaz Khan	9
The Wife as an Accomplice: Section 377 and the Regulation of Sodomy in Marriage in India Saptarshi Mandal	31
The Limits of Liberty: The Crime of Male Same-Sex Conduct and the Rights to Life and Personal Liberty in Singapore Jack Tsen-Ta Lee	47
Legacies of Exceptionalism and the Future of Gay Rights in Singapore Stewart Chang	71
Pride or Prejudice? Sexual Orientation, Gender Identity and Religion in Post-Colonial Hong Kong Amy Barrow and Joy L Chia	89
International Law and the Rights of Gay Men in Former British Colonies: Comparing Hong Kong and Singapore Carole J Petersen	109
Towards the Elimination of Prescriptive Sexual Regulation in Family Law in Singapore Leong Wai Kum	131
Asia and Oceania LGBTI Law Reform: Breaking the Log-Jam The Hon Michael Kirby AC CMG	151
ANALYSIS
A Commentary on Jetstar Hong Kong Airways Decision before the Air Transport Licencing AuthorityJae Woon Lee and Michelle Dy	175
ARTICLES
Interaction between International Standards and Domestic Constitutional Norms—A Case Study of the Chief Executive Election in Hong Kong Lin Feng	193
The Illegality Defence in Corporate Law Claims Against Directors and Officers Wai Yee Wan	225
Deconstructing Sponsor Prospectus Liability  Syren Johnstone, Antonio Da Roza and Nigel Davis	255
REVIEW ARTICLE
The Politico-Economic Context of Special Regional Autonomy: International and Constitutional Law Meets the Hong Kong Predicament Roda Mushkat	287
CHINA LAW
Practice and Theory of the Guiding Case System in China Yang Li	307
Lame-Duck Bankruptcy Institutions under Government Intervention in Reorganisation of Listed Companies in China (Part 1) Zhao Huimiao	339
BOOK REVIEWS
Board Accountability in Corporate Governance, Andrew Keay Lin Zhang	379

Eric Maskin to Deliver Inaugural Corporate Law and Governance Lecture

AIIFL-Companies Registry Corporate Law and Governance Distinguished Lecture Series

Mechanisms for Corporate

Decision Making

Inaugural Lecture by

Nobel Laureate Professor Eric Maskin

Adams University Professor, Harvard University

Monday, 22 February 2016
6:30 - 7:30 pm
Large Moot Court, 2/F Cheng Yu Tung Tower
Centennial Campus, The University of Hong Kong

Most corporations make decisions according to “weighted majority rule” -- shareholders’ votes are weighted by the proportion of shares they hold, and the majority gets its way.  One problem with this mechanism is that it cannot incorporate intensity of preference.  In this lecture, Professor Maskin explores alternatives to weighted majority rule.

      Professor Eric Maskin is Adams University Professor at Harvard and a member of the AIIFL Academic Advisory Board.  He received the 2007 Nobel Prize in Economics (with L. Hurwicz and R. Myerson) for laying the foundations of mechanism design theory.  He also has made contributions to game theory, contract theory, social choice theory, political economy, and other areas of economics.  He received his A.B. and PhD from Harvard and was a postdoctoral fellow at Jesus College, Cambridge University.  He was a faculty member at MIT from 1977-1984, Harvard from 1985-2000, and the Institute for Advanced Study from 2000-2011.  He rejoined the Harvard faculty in 2012.

Online Registration here or via www.AIIFL.com to reserve a place.
Enquiry: Flora Leung at fkleung@hku.hk

Asian Institute of International Financial Law (AIIFL)
Faculty of Law, The University of Hong Kong

HKU Class of 2015 Graduates (Law PhD, SJD and MPhil)

Congratulations to our 7 PhD, 4 SJD and 1 MPhil graduates who will have their degrees conferred upon them at the 194th Congregation on 3 December 2015 at the University of Hong Kong. The newest members of our RPG alumnae family include the following:

1. Dr. Man Ho AU (PhD). Rethinking access regulation from the transaction cost economics perspectives : a comparative analysis of the legal and policy developments for first and next generation access networks in the US, the UK, Australia and Hong Kong.  Supervisor: Richard Wu.  Examiners: Mark Williams (University of Melbourne), Kevin Pun (HKU), Felix Chan (HKU).

2. Dr. Shan CHI (PhD).  Chinese inventiveness criteria and their impacts on industry : inspiration from bio-patents.  Supervisor: Yahong Li.  Examiners: Benjamin Liu (John Marshall Law School), Yun Zhao (HKU), Haochen Sun (HKU).

3. Dr. Li GAO (PhD).  Promoting the development of green technology in China : using patent law as an environmental instrument.  Supervisors: Yahong Li and Jolene Lin.  Examiners: Bryan Mercurio (CUHK), Michael Ng (HKU), Shahla Ali (HKU).

4.  Dr. Evan Corby GIBSON (PhD).  Managing financial stability and liquidity risks in Hong Kong's banking system : what is the optimum supervisory model?  Supervisors: Douglas Arner and Lee Aitken.  Examiners: Michael Taylor (Moody's), Berry Hsu (HKU), Emily Lee (HKU).

5. Dr. Peng HAN (PhD).  An analysis of the changing nature of law and social solidarity in contemporary China : the application of Durkheim's theory of solidarity to Chinese society. Supervisor: Scott Veitch.  Examiners: Zheng Ge (Shanghai Jiaotong), Albert Chen (HKU), Hualing Fu (HKU).

6.  Dr. Jieying LIANG (PhD).  Party autonomy in contractual conflict of laws: a Chinese perspective on the adjudication of the enforceability of choice of law clauses.  Supervisor: Michael Tilbury.  Examiners: Brian Opeskin (Macquarie), Anselmo Reyes (HKU), Xianchu Zhang (HKU).

7.  Dr. Herman Yung Sing TO (PhD).  Microfinance in China - the postal bank and credit cooperatives as key players.  Supervisor: Douglas Arner.  Examiners: Zhou Zhongfei (Shanghai University of Political Science and Law), Say Goo (HKU), Xianchu Zhang (HKU).

8.  Dr. Ida Kwan Lun MAK (SJD).  Institutionalizing the effective use of ADR for the resolution of shareholder disputes in Hong Kong.  Supervisors: Katherine Lynch and Shahla Ali.  Examiners: Kun Fan (CUHK), Yun Zhao (HKU), Anna Koo (HKU).

9.  Dr. Xiao PAN (SJD).  Private non-enterprise institutions in China in an era of charity law reform.  Supervisor: Say Goo.  Examiners: Wei Shen (Shanghai Jiaotong), Douglas Arner (HKU), Hualing Fu (HKU).

10.  Dr. Xue PENG (SJD).  Corporate governance of Chinese privately owned enterprises listed in Hong Kong : an empirical study of three levels of agency problems.  Supervisor: Douglas Arner.  Examiners: David Donald (CUHK), Say Goo (HKU), Xianchu Zhang (HKU).

11.  Dr. Zhongyi TAO (SJD).  Fair use regime in China : findings from an exploration into judicial experiences.   Supervisors: Yahong Li and Po Jen Yap.  Examiners: Irene Calboli (Marquette), Hualing Fu (HKU), Alice Lee (HKU)

12.  Ms Yuchen SONG (MPhil).  Exploring derivative action in Japan and China.  Supervisor: Guanghua Yu.  Examiners: Hui Huang (CUHK), Douglas Arner (HKU).

Charles Lam and Say Goo on Enforcement in Chinese Corporate Governance

"The issue of enforcement in Chinese corporate governance"
Charles Lam and Say Goo
Journal of Financial Crime
2015, Vol. 22, Issue 4, pp. 468-475

Abstract: The purpose of this article is to discuss two important aspects of enforcement of ethical standards: indirect enforcement, that is the Confucian approach, and common law enforcement. In the context of Confucianism, one should not be too attached to the liberal interpretation of the Confucian texts but must have the wisdom to apply the concepts case-by-case and in accordance with a particular context. By referring to the Confucian teaching, there are several ways to encourage the superior to follow the ethical standards, namely, education, fear of punishment by society, peer pressure, intrinsic value, continuing education and codification of Confucian value/moral standards. In addition, there are several enforcement options based on the Entity Maximization and Sustainability Model, which is highly relevant to the enforcement model of Confucianism. It is the first of its kind in strengthening the enforcement of Chinese business ethics by adopting the Confucian approach and common law approach. The two are not mutually exclusive but complementary with each other to bring the enforcement of Chinese business ethics to the next level.  Contact the authors for a copy of the article.

Corporate Governance Reform in Hong Kong (Bryane Michael and Say Goo)

"Corporate governance and its reform in Hong Kong: a study in comparative corporate governance"
Bryane Michael and Say Goo
Corporate Governance
2015, Vol. 15, Iss. 4, pp. 444-475

Purpose 

– The purpose of this paper was to determine to what extent Hong Kong’s experience proves (or disproves) theories from corporate governance in the areas of family ownership, concentration, self-dealing in Hong, executive compensation and other issues. This paper – written in the comparative corporate governance tradition – uses data from Hong Kong to discuss wider trends and issues in the corporate governance literature.

Design/methodology/approach 

– The authors use the comparative corporate governance approach – exposing a range of corporate governance theories to the light of Hong Kong data. The authors purposely avoid over-theorising – leaving the data to speak for themselves for other researchers interested in such theorising.

Findings 

– The authors find that Hong Kong presents corporate challenges that are unique among upper-income jurisdictions – in terms of potentially harmful (shareholder value diminishing) family relationships, shareholder concentration and self-dealing by insiders. The authors also show that excessive executive compensation, accounting and audit weaknesses do not pose the same kinds of problems they do in other countries. The authors provide numerous comments on theoretical papers throughout the presentation in this paper.

Research limitations/implications 

– The authors chose a relatively unused research approach that eschews theory building – instead, the authors use data from a range of sectors to build an overall picture of corporate governance in Hong Kong. The authors subsequently affirm or critique the theories of others in this paper.

Practical implications

– The original analysis conducted by the authors provided 22 recommendations for revising listing rules for Hong Kong’s stock exchange. Others – particularly Asian officials – should consider Hong Kong’s experience when revising their own corporate governance listing rules and regulations.

Originality/value 

– This paper offers new and original insights in four directions. First, the authors use the empiricist’s method – presenting data from a wide range of corporate governance areas to comment on and critique existing studies. Second, the authors provide a system-wide view of corporate governance – showing how different parts of corporate governance rules work together using concrete data. Third, the authors provide a new study in the comparative corporate governance tradition – another brick in the wall that is “normal scientific progress”. Fourth, the authors pose tentative resolutions to highly debated questions in corporate governance for the specific time and place of Hong Kong in the early 2010s.   Click here to download the article.

Jin Sheng (PhD 2010)'s New Book on China's Listed Companies

China's Listed Companies: Conflicts, Governance and Regulation
Jin Sheng (PhD 2010)
Wolters Kluwer
March 2015, 416 pp.
Series: Vol. 25 of the International Banking and Finance Series

Description: The number of interactions between China’s stock markets and markets in other parts of the world continues to grow prodigiously. However, as in many transitional economies, insider control and inefficient law enforcement pose serious problems for the corporate governance of Chinese listed companies. China’s legal infrastructure and enforcement is poor, allowing controlling shareholders to easily manipulate control rights and to maximize their own benefit rather than that of investors. 

    Using a law and economics approach, this book first analyses the types of pervasive misconduct of large shareholders in China’s listed companies, and then offers concrete reform proposals toward effective protection of minority shareholders in the interwoven areas of regulation, enforcement, and the judiciary. The author addresses the necessity for recognizing the fiduciary duty of controlling shareholders, for improving voting rights for minority shareholders, for enhancing the disclosure system, and for restricting insider trading and market manipulation. Among the issues and topics examined are the following: 

• the pervasive use of ‘tunnelling’ and misappropriation; 
• how pyramidal structures, cross-holdings, and control of management enlarge the rights of controlling shareholders and some institutional investors; 
• 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; 
• asymmetric information between large shareholders and minority shareholders, and between institutional investors and individuals; and 
• the feasibility of developing an investor protection–oriented regulatory system through a cautious integration of legal transplants and indigenous legal resources. 

     This research analyses the roles of three interest groups: controlling shareholders, institutional investors, and minority shareholders. In addition to case studies, interviews, and comparative studies, game theory models are used to test the relationship among the three groups and to show how conflict can be reduced. With its in-depth description and analysis of the current reality of China’s stock markets, this book has no peers in its insightful recommendations on how to improve minority investor protection in China. Of particular value to multinational corporate counsel, it is sure also to find a place near the desk of everyone interested in Chinese markets, whether from a legal or a business standpoint.  Click here for more information.

AIIFL and Companies Registry Sign Agreement on Corporate Law and Governance

Registrar of Companies, Ms Ada Chung and AIIFL Director, Prof Say Goo

The Asian Institute of International Financial Law (AIIFL) and Companies Registry (CR) recently signed a landmark agreement for sponsorship of the AIIFL-CR Distinguished Visiting Professorship and Corporate Law and Governance Lecture Series. The sponsorship will bring to AIIFL world renowned corporate law scholars to collaborate with members of AIIFL and to deliver cutting edge lectures on Corporate Law and Corporate Governance issues that are pertinent to Hong Kong and the world. AIIFL has over the years collaborated with the Companies Registry. The agreement marks the beginning of another era of collaboration and co-operation.

Say Goo on the Limits of Directors' Duties in Fostering Corporate Social Responsibility

Research Handbook on Directors' Duties
Edward Elgar, November 2014
Editor: Adolfo Paolini

Book description: Directors’ duties and liabilities have become the centre of a general legal discussion following the 2008 financial scandal that resulted in global recession. Questions have arisen regarding the ways in which the directors of the world’s major financial institutions have handled their duties and how their decisions have impacted investors, shareholders and consumers. This detailed Handbook discusses the nature of the relationship between a company and its directors, assessing issues such as how duties are discharged, liabilities that may arise and what interests directors should consider before embarking on commercial ventures. AIIFL Director, Prof Say Goo, and Desiree Klingler (LLM 2013) contribute a chapter titled "The limits of directors' duties in fostering corporate social responsibility and the idea of a multi-stakeholder board" (pp. 185-210)