Room to improve


This issue of China Business Law Journal explores a variety of topical developments, some of which earn a better reception from legal experts than others. In our cover article, we see reforms to China’s private equity and venture capital (PE/VC) industry are ongoing, but for a sector with great growth potential there is still uncertainty, from regulatory interpretation to administration and enforcement. Capital confusion looks at various areas where experts warn a lack of clarity may impact investment.

prologueAn ongoing power struggle between the National Development and Reform Commission (NDRC) and the China Securities Regulatory Commission (CSRC) has not helped. But there are other problems. Reforms to open up state-owned enterprises to private investment are yet to be implemented. A market maker system for the New Third Board appears likely to be postponed. And the CSRC is yet to issue any formal administrative regulations on private funds. It was hoped that Shanghai’s free trade zone (FTZ) could provide a channel for capital flow in and out of China, but so far there have been no clear regulations or measures on the operations of PE managers in the FTZ. Experts say the solution to regulatory confusion in the private fund sector is integration of policies and regulations for private funds, a more active self-regulatory organisation, and uniform regulations established at the national level.

We also look at law firm networks in this issue. Clubs are trumps explores whether they may be worth your while. There are an abundance of law firm networks that leading independent firms around the globe have utilised. Structured as membership organisations, these networks provide a useful resource for professional and social networking, information sharing and cross-selling. However the selection process, guided by word of mouth, inter-network recommendations and law firm rankings, is rigorous, and membership fees are high. So does it pay to be a part of the club? We talk to some of the leading networks, and their clients, for their views in this must read article.

Finally, a look at the newly revised Environmental Protection Law. Perhaps more than any other law, this one has the potential for such a broad impact – on businesses and manufacturers, on government agencies and authorities, and on the whole national economy, not to mention public health and quality of life. Protecting who? asks whether changes to the law will finally have an impact on the pollutants that have been plaguing China.

Unfortunately this article argues that, apart from some notable exceptions including article 63, which requires police to detain polluters for certain offences, the changes have fallen short of expectations. Revisions fall into the following categories: provisions that already exist; provisions that are so vague as to have no use; and provisions that depend on future legislation. Importantly, the article also makes recommendations for changes that need to be made to give the law real teeth.