“If you do not change the direction in which you are going, you will end up where you are headed.” The advice from Laozi provides a timeless warning, and in this issue the winds of change are blowing across some interesting legal plains in China.
The PRC’s capital markets are awash with reforms and speculation surrounding the looming launch of an international board. The Shanghai and Shenzhen exchanges have both released plans for lifting their games, in particular strengthening their listings requirements, which will ensure only the fittest companies make the grade. Gone are the days of backdoor listings for those outfits not strong enough to earn a rightful place on the exchanges. The China Securities Regulatory Commission (CSRC) has shown a determination in recent months with regulatory amendments focusing on this issue. The commission has also been busy with transparency issues including greater obligations and responsibilities governing information disclosure for companies seeking to list.
All this couldn’t be more timely. Domestic markets have not enjoyed the best of reputations and lately international scandals involving Chinese traders have not helped matters. But with exchanges and regulators addressing anomalies, and this coming hot on the heels of the appointment of a new CSRC chairman – it all rings of the beginnings of a rewired system rather than an ad hoc fuse replacement. It’s likely that an international board is still a way off, but we’ll be watching the bourses closely this year, as will in-house counsel.
When it comes to change, the biggest state-owned enterprises have undergone massive restructuring in recent years to become competitive in the international arena. In Business Law Dialogue this issue, we take time out in Beijing with Sinopec International’s general counsel Sun Xiaoqing to discuss the evolution, both of her personal career and of how she managed change at the legal helm of the company, from a centralised structure to an expanded international team with local expertise in a string of jurisdictions.
Initially there was not even a legal department in its own right at Sinopec, and Sun recalls to us the Sinopec’s listing and an era of real change following the State-owned Assets Supervision and Administration Commission’s efforts to promote a system of corporate in-house counsel. The step-by-step developments, including better resource planning, an innovative approach to contract approvals, and international crisis management, all make for interesting reading.
Finally a break from change with an issue that, along with death, is never more certain – taxes. Following slacker domestic growth, tax authorities will be sharpening their inspection efforts, and capital transactions have hit the list of mandatory items for special attention. Therefore, mergers and acquisitions and restructuring of enterprises will be key targets. Are you ready?
So from the fresh breezes of change to the stale breath of certainty, we provide all this month. Which brings to mind a Confucian gem: “Only the wisest and stupidest of men don’t change.” So which, then, is the tax inspector?