Developing a Hybrid Variant from Transplanted Roots: Hong Kong Corporate and Securities Law in the Service of a Chinese International Financial Centre

Abstract

This paper is a chapter of a larger study of Hong Kong law. It measures the quality of Hong Kong corporate and securities law against its unique characteristics and international functions. Hong Kong’s legal system was transplanted from Great Britain to a colonial port that was part of a larger colonial network. The transition of Hong Kong from a goods-trade-based entrepot of the British Empire to an international financial centre of the People’s Republic of China has been accompanied by a large buildup of corporate and financial law and regulatory infrastructure. This has prompted a number of changes to the inherited law, but both this initial endowment and new law imported from the US and Commonwealth countries should be adapted to the risks present in Hong Kong – which are different from those in the UK, the US or Australia. Hong Kong must also continue to adapt to the new tasks presented by the rapidly changing Chinese economic and legal framework as well as competitive pressures from offshore markets like Singapore. This paper assesses the quality of Hong Kong corporate and securities law taking these variables into account, and finds that – while meeting many challenges well – it has in some respects adopted off-the-shelf, ill-fitting solutions while failing to adapt its tools to local needs, particularly with regard to the risks posed by controlling shareholders and foreign listed companies.