Success in this globalized world often requires a good sense of creating or manoeuvring connections. This is true for individuals, companies and countries. Bridging the gap between the wisdom and resources of different markets and players may stimulate unexpected interactions and produce fruitful outcomes. In this issue, we explore the potential a variety of connections hold.
Our cover feature, Capital connections, looks at the new investment channels Chinese regulators are building in the mainland capital markets. China’s ongoing revision of the Securities Law is expected to bring a new registration system for issuing new shares, and experts say the regulatory approach over IPOs will focus more on information disclosure. The current methods linking regulators, issuers and investors are bound to change.
Connecting China’s two major financial centres is a ground-breaking move. Foreign investors have now been given a new avenue to access mainland capital markets via the Shanghai-Hong Kong Stock Connect. The stock connect provides greater opportunities to investors, but where the two markets diverge in regulatory and trading practice is likely to create risks. Investors must consider a number of factors before a decision can be made.
Another hot spot is the New Third Board, China’s over-the-counter market. The advent of more rules in the near future is expected to further the market’s maturation and governance. However, experts caution against imprudent investment behaviour.
Offshore bound examines how offshore investment structures could be affected as major economies join hands to combat tax avoidance. G20 is supporting the OECD to carry out its plan on tax base erosion and profit shifting. China is an active player in this joint effort, with its regulators recently issuing new rules hindering companies from improper use of their offshore affiliates.
That said, tax is neither the only nor, perhaps, the main impetus connecting investors with offshore jurisdictions. Offshore regulators have been at the forefront in developing more sound, dependable, accessible and compliant environments for investors. The article covers the latest developments in the most popular offshore jurisdictions, from the islands of the Caribbean and Europe to the financial hubs in the Middle East, Africa and Asia Pacific regions.
Exchange of knowledge and experience is another critical type of connection. High flyer features top American lawyer Kelly Welsh, the present US Department of Commerce general counsel. Welsh gave China Business Law Journal his observations on reforms in Chinese commercial law earlier this year following a US-China legal exchange conference.
China, he believes, has made significant strides in building a robust commercial rule of law, yet he adds that more still needs to be done. In this article, Welsh shares his insights as to what China has done or may consider doing in the areas of legal transparency, foreign bribery and intellectual property protection.