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THE REFORM OF THE JUDICIAL SYSTEM IN CHINA IS CONFRONTED WITH A CRUCIAL PERIOD OF STRATEGIC OPPORTUNITIES
XIAO Yang
Front. Law China. 2015, 10 (1): 1-6.
https://doi.org/10.3868/s050-004-015-0001-4
On November 23, 2014, the Humanities and Social Sciences Forum of China, hosted by Renmin University of China and organized by Renmin Law School, was held in Yifu Conference Room of Renmin University of China. The theme of the forum is “China’s Rule of Law: Move Forward the Modernization of Regulatory Institutions and Regulatory Capacities of China.” The purpose of the forum is to further implement practices according to the spirits of the Fourth Plenary Session of the 18th Central Committee of the Communist Party of China and to modernize the country’s regulatory institutions. Professor XIAO Yang, the former Chief Justice of the Supreme People’s Court of China, has delivered a keynote speech on “The Reform of the Judicial System in China Is Confronted with a Crucial Period of Strategic Opportunities.” He stated that currently China was experiencing a complicated and diversified period of transformation and that the rule of law should become a social consensus. To rule the country by law, first and foremost, it is critical to do so according to the Constitution; and to administer the country by law, it is essential to administer according to the Constitution. Good law and governance are the two basic aspects of the rule of law and should have a benign interaction in practice. Additionally, the top-level plans shall first be well-designed based upon the spirits of the Fourth Plenum and the constitutional rules, and then the judicial reforms shall be actively, smoothly, and gradually carried out according to the plans. This has become a new model of legal construction. Moreover, the relations among the various aspects shall be resolved correctly. Those aspects include the judicial systematic reforms and the working institutional reforms, the protection of judicial authority and the enhancement of supervision over governance, the relations among different interest groups from the long-term development perspective, and the systematic and cultural constructions of the law. Finally, he emphasized that the rule of law needed faith and dream and wished to see more young people to inherit the dream of the rule of law.
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THE INTERPLAY OF THE STATE AND THE FIRMS: OVERSEAS LISTING AS A GOVERNANCE INSTITUTION FOR CHINESE SOES
MIAO Yinzhi
Front. Law China. 2015, 10 (1): 46-76.
https://doi.org/10.3868/s050-004-015-0005-2
There are both considerable horizontal and vertical governance problems with the Chinese state-owned-enterprises (SOEs), which mean the firm operators are basically unaccountable. Due to the SOEs’ privileged positions in the Chinese political economy, almost all kinds of traditional institutions of corporate governance are far from perfect. Thus the value of overseas listing as a governance mechanism is highlighted, and that could be well revealed by a deeper analysis of the cost-and-benefit balance done by the government, which controls the SOEs and makes the real decision of overseas listing. Such a listing would bring a variety of economic benefits to SOEs, but the major driver for the action is the government’s wishes to employ an effective mechanism to restructure and discipline the old SOEs, solve the problems such as manager slack and still keep things under control. A change of the main overseas listing place from New York to Hong Kong after the shock of a class action further testifies such considerations from the state. But interestingly, during this process, bound by the external rules, the powerful state itself has gradually been driven in a more market-oriented and rule-abiding direction. This implies the complexity of the interplay of the state and the firm and reflects a typical market-oriented reform and an institutional evolution story of China in the past decades.
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ON CASES AGAINST CORPORATE MANAGERS FOR BREACHING THEIR DUTY OF LOYALTY AND/OR DUTY OF DILIGENCE IN CHINA
WANG Jun
Front. Law China. 2015, 10 (1): 77-99.
https://doi.org/10.3868/s050-004-015-0006-9
The statistics of 137 cases from 14 provinces or municipalities of China concerning the disputes of corporate managers’ duty of loyalty and duty of diligence shows that the majority of companies involved in such cases are those whose shares are not publicly traded (mainly limited liability companies and all sorts of foreign invested enterprises). Joint stock limited companies (including listed companies) rarely file lawsuit against their directors, supervisors, or senior officers. The duty of loyalty has been the center of most cases. Many cases pertain to issues that are not within the list of prohibited acts in the Company Law of the People’s Republic of China to directors, supervisors, and senior managers. Therefore, courts frequently make their judgments according to one of the general provisions of the Company Law. Courts conduct different forms of legal interpretations in their decisions. On one hand, in the majority of cases, courts tend to procedurally examine the questions of facts and to literally apply the law. Actually, the duty of loyalty and duty of diligence have been applied by many courts as “the duty of compliance with law.” On the other hand, a few decisions demonstrate that some courts examine cases under the doctrine of substance-over-form, showing their creative interpretations of the law. The focus of the judicial practice in this type of cases today in China is on how courts should explain and apply the general provisions in Article 148 (1) and Article 149 (1.8) of the 2005 Company Law of China (amended in 2013).
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THE LEGAL REGULATION ON BOARD SIZE IN CHINA: RETROSPECTION AND ANALYSIS
LI Jianwei,LI Kai
Front. Law China. 2015, 10 (1): 100-122.
https://doi.org/10.3868/s050-004-015-0007-6
The issue of the board size includes sub-issues such as the number of directors and the structure of the board. Most management scholars believe that the number of directors, the proportion of different types of directors, and the power distribution between the board and managers, are important factors affecting the cost and performance of the board. The board size is also an interesting legal issue because it is subject to the company law. The existing Company Law of the People’s Republic of China sets upper and lower limits both on joint stock companies and limited companies. Such a strict legislative model is unique in the world. According to classical political theory, the recognition of free people is the most fundamental origin of the legitimacy of law. Therefore, the companies themselves are supposed to discover corporate governance pattern themselves. Is it necessary for legislators to set a limit on the number of directors? If so, should such limit be or permissive? What are the theoretical basis, the purpose, and the real effects of such a norm? This article attempts to answer the questions raised above.
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THE RIGHT TO EMPLOYMENT SECURITY IN CHINESE LABOR LAW:LATEST DEVELOPMENTS IN LIGHT OF INTERNATIONAL LAW
LU Haina
Front. Law China. 2015, 10 (1): 136-160.
https://doi.org/10.3868/s050-004-015-0009-0
Employment security is very often examined from a labor law rather than a human rights perspective. This article looks at the employment security in Chinese labor law from a human rights perspective. The right to employment security includes both negative and positive aspects: a negative right to protection against unfair dismissal, including dismissal for cause and economic redundancy, and a positive right to employment stability. Comparing Chinese labor law with international standards, this article focuses on analyzing important changes in the legislative developments in China in the past years, such as severance pay, labor contract with indefinite duration, and labor dispatching. This article also points out the main deficiencies, such as dismissal on the ground of criminal liabilities, weakness of trade unions and law enforcement, and no exemption of small employers. The article concludes with observing a tendency of Chinese law getting closer to international standards and pointing out the approach China should follow: to enhance employability through vocational training and providing better social security when strengthening the legislative protection of employment security.
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AN EGG VS. AN ORANGE: A COMPARATIVE STUDY OF TAX TREATMENTS OF NONPROFIT ORGANIZATIONS
HU Tianlong
Front. Law China. 2015, 10 (1): 161-201.
https://doi.org/10.3868/s050-004-015-0010-4
This article focuses on the comparisons of the tax exemption schemes in the US and China through a three-fold discussion. Despite the tremendous development of China’s nonprofit sector, not many comprehensive studies have been completed on such reforms. The tax treatment of Chinese nonprofit organizations, as a crucial component to constructing a nonprofit sector, is unsophisticated and short of practical significance. The expansion of the nonprofit sector in the past decades has resulted in many problems concerning its tax framework: incoherently defined public benefit or charity purpose of nonprofit organizations; the unavailability of an enforceable fiscal incentive system to promote charitable donations, arduous and discouraging administrative procedure of obtaining the tax exemption, burdensome requirements for the application and registration of nonprofit organizations, such as dual management, high threshold of capital endowment for foundations, and prohibition on cross-region development. Moreover, from a jurisprudential perspective, in the Chinese tax context two cautions are methodologically identified. First, the scarcity of decent comparative legal tax scholarship in general does not support quality comparison. A shortage of paradigmatic discourse shows the simultaneous existence of bluntly conflicting arguments, parallel courses, and irregularities in analysis. Second, the tax cultural traditions as well as social, political, and legal settings of a systematic tax governance framework should be included in tax comparatists’ theorizations. A tax study ultimately has to be conducted from a “big-picture” perspective, in which a tax system is embedded. Otherwise, a comparative study may easily turn into a descriptive, mechanical, and perfunctory analysis. It argues that a comprehensive tax transplant effort of valued ideas and practices, although bold and uncomfortable for the recipient country at the beginning, is what China needs to build a robust nonprofit sector.
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