Abstract
This paper intends to shed light on the contentious theme of the reception of legal transplantation in the host environment, by examining the 2014 legislative reform of legal capital in China, which at least on paper imitates the enabling settings of US Revised Model Business Corporation Act (RMBCA). The paper looks at the interconnections between national-specific contextual elements, the resultant complexities, and the spillover effects of transplanted configurations in the unique Chinese socio-cultural setting, implicating the discrepancy between the ‘law in practice’ and the borrowed words ‘on the books’, and suggesting the importance of gaining a holistic understanding of ‘law’ involving the legal traditions in both the donor country and the recipient nation.
Highlights
One has to appreciate that even today under the ever-increasing force of globalization, in many aspects China remains a metaphor for notable difference, distinct from its Western counterparts: the fact that State-owned Enterprises (SOEs) continue to dominate primary and pillar industries of the economy and enjoy privileges in various aspects challenges key assumptions of the free market economy and the hegemony of economic liberalism
Building upon and complementing existing doctrinal research on legal capital reform, this paper aims to explore in depth the fit of the US-inspired legal capital rules in the Chinese corporate law context from doctrinal, ideological, and practical perspectives, and to shed some new light on the contentious debate of legal transplantation from China’s legislative amendment experience
This premature public disclosure placed considerable pressures on other political authorities to pass the reform plan swiftly, almost as a knee-jerk reaction— the entire reforming plan concerning legal capital put forward by the State Council was officially approved by the Party-State half a month later in the Central Committee of the Communist Party’s Third Plenum in November, and all detailed company law revisions approved by the National People’s Congress (NPC) in December 2013, without revision, less than two months later
Summary
‘East is East and West is West, and never the twain shall meet’.1 The insurmountable divide between the East and the West described by Kipling over a century ago has, at least in form, been mitigated in the contemporary practice of law and development in China. Future legal scholars, looking back at the development of Chinese company law legislation from 1978 to the new millennium, will note that the law has been positively open to foreign influences to a degree unimaginable in previous times, ‘common practices in advanced market economies in the West’, and legislative changes concerning legal capital are no exception. While a formal and obligatory ex ante legal capital framework was initially expounded in China’s 1993 Company Law regime, light-years away from the enabling company law regime prevalent in advanced market-based economies, subsequent reforms in 2005 seemed to be increasingly moving in this direction. The fit of these US-inspired legal capital rules within the Chinese context far has not been given adequate thought The passage of these amended rules intrinsically rests upon the powerful metaphor of the ‘legal transplant’,8 holding that laws associated with advanced market economies are an autonomous set of formal, apolitical rules unconstrained by political and cultural borders, which can function and bring about analogous market development in developing countries, just as in the case of China.. Conventional ideological and institutional factors specific to the Chinese socioeconomic setting affect the functions of these transplanted rules, making them unlikely to become fully purposive
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