Company Law in East Asia

Roman Tomasic

• Publisher: Routledge
• Year: 2018
• eBook ISBN: 9780429861536
• Topic: Law
• Subtopic: Business Law
• Index: Law

First published in 1999, this volume provides an overview of company laws in South East Asia, North East Asia and the Pacific. The chapters adopt a standard format to allow for comparisons to be made as well as highlighting key features of company laws in each jurisdiction. The contributors are experts in their fields and present practical and policy related insights. The book also contains some useful overviews of company law themes in Asia.

1	An Introduction ROMAN TOMASIC*

Company law in many parts of Asia is currently undergoing considerable change. These changes have many causes. Some of these causes can be found in the need to reform outdated laws which are no longer considered to be appropriate to contemporary economic and political circumstances. Other explanations for the rush to reform the company laws in many Asian countries may be found in pressures coming from international sources, such as multinational corporations, international financial institutions and professional groups. To some degree, the pressure to achieve some kind of harmonization in international or crossborder corporate law practice in the region has also been a factor in stimulating reform efforts.¹ Yet another factor which has influenced company law reform in the region has been the pressure to lower business costs and to use more streamlined bodies of company law for this purpose.

In each country or legal system discussed in this book, the precise mix of factors which have influenced law reform has differed, but what is very clear is that company law has begun to be seen to play a much more important role in regard to matters such as corporate governance and corporate social control. The financial crisis which beset Asian economies in mid 1997 has also focused attention on other corporate law ideas, such as corporate insolvency, conflicts of interest on the part of corporate controllers and corporate borrowing and capital raising.

The chapters in this book seek to provide an in-depth overview of the background and the operation of company law ideas in a number of legal systems in Asia. The countries or legal systems covered here are primarily to be found in East and South East Asia, namely China, Japan, South Korea, Taiwan, Hong Kong, Vietnam, Thailand, Malaysia, Singapore, Indonesia, Brunei and the Philippines. The book also discusses the company laws of Australia, New Zealand and Papua New Guinea. Due to a paucity of legal materials, it has not been possible to cover the company laws of Cambodia, Laos and Myanmar. We also have not sought to cover the company laws of the legal systems of South Asia. Perhaps the latter countries can be left to another volume although English language materials on these South Asian jurisdictions are relatively easily accessible.² The book also includes a chapter by Professor David Campbell on the meaning of the rule of law in the context of Asian company law reform.

Chapters 1, 2, 3, 4, 5, 6, 7 deal with company laws in Japan, Korea, the Peoples’ Republic of China, Hong Kong and Taiwan. Chapters 8, 9, 10, 11, 12, 13, 14, 15, 16, 17 contain discussions of company laws in Vietnam, Thailand, Malaysia, Singapore, Indonesia, the Philippines, Brunei, Papua New Guinea, New Zealand and Australia.

The discussion of each body of company law in the chapters which follow Chapter 2 adopts a largely standard format so as to ensure some degree of comparability between jurisdictions and to ensure that broadly similar questions are addressed by each author. Each chapter has been prepared by a company law authority who has sought to bring together the principal sources of company law in each jurisdiction. Wherever possible, each chapter also draws upon local legal expertise, either in the form of a local co-author (where the author is not based in that jurisdiction) or through resort to informal advice from local experts in the company law of the particular jurisdiction.

The authors of each country or legal system chapter were asked to discuss a set number of topics or issues which became the section or sub-section headings of each chapter. Sometimes a number of these topics are more conveniently discussed together, such as where there is limited legal material on a particular topic or where it is considered more appropriate in a particular context to discuss a topic in a different order. In some jurisdictions some areas of company law, such as takeovers and securities laws, are relatively underdeveloped or even non-existent and so less attention is devoted to these areas.

Each chapter begins with an introduction to the legal system of each jurisdiction and is followed by an overview of the relevant corporate law statute in that jurisdiction. This is followed by a discussion of the nature and powers of corporate regulatory bodies in the jurisdiction; a discussion of the types of companies which may be formed in that jurisdiction and the powers and capacities of these companies. Each chapter then goes on to discuss the company formation process, and the internal and external administration of companies. Finally, each chapter also discusses takeover and securities laws in each jurisdiction as well as such other areas as may be appropriate.

Generally, therefore, each author discusses his or her jurisdiction’s body of company law by reference to the following issues or headings:³

1 An introduction to the nature of the legal system in each country, its history and judicial and regulatory structure

2 A description of the corporation law statute (and case-law) in the jurisdiction

• The constitutional basis of the company law

• How the company law came into being

• Who is responsible for changing the law?

• The principles, if any, underlying the company law

• How the legislation is interpreted (rules of interpretation)

3 The nature and powers of corporate regulatory bodies in the jurisdiction

• A description of the powers of company regulatory bodies

• The role of regulatory bodies in policy formation, practice and so on

• The mechanisms for the review of regulatory action

4 A description of the types of companies, their powers and so on

• A description of the types of local companies

• The recognition of foreign companies in the jurisdiction

• The legal capacities and powers of companies

5 Company formation

• The registration of companies, promoters and so on

• The corporate constitution (for example memorandum and articles)

• The restrictions on the use of certain names

• Membership and share capital requirements

• The amendment of corporate constitution

• Company registers

6 The internal administration of companies

• The registered office and name

• The duties, powers and responsibilities of officers

• Meeting procedures

• The audit and accounting rules

• The annual return and other registers

• Shareholder protection rules (for example minorities)

• The relationship between management and shareholders

• Corporate financial transactions (for example, charges, share buy backs and receivers)

7 The external administration of companies

• The rules regarding arrangements and reconstructions

• Voluntary administration and corporate rescue provisions

• Company winding up rules, tests for insolvency, grounds for winding up and mechanisms for initiating insolvency proceedings

• The protection of creditors and the ranking of claims

• Control of insolvency practitioners

8 Takeover rules

• An introduction to company takeover rules (statutory or voluntary)

• Takeover thresholds

• Disclosure requirements and shareholder protection

• The role of lawyers, experts and the regulator in takeovers

• Mechanisms for the review of takeover activity

9 An introduction to securities regulation in the country/jurisdiction

• The relationship between stock exchange(s) and corporate regulation

• The types of securities regulated

• The legal effect of listing rules and business rules of the stock exchange(s)

• Market conduct rules and sanctions for securities misconduct

10 Miscellaneous

• The powers of the courts

• Civil remedies

• Offences

• Who may initiate proceedings?

• The registration and control of persons under the legislation (for example auditors, liquidators and experts)

It should be noted that the majority of Asian legal systems are based on civil law ideas drawn from countries such as Germany, the Netherlands and France, although these ideas have often been affected by common law systems (principally, by ideas from the US and UK common law systems).⁴ These civil law systems operate around broad codes which seek to set out the principles applying to a particular area and, generally, are not modified or developed through the courts by resort to the doctrine of precedent. Judges in the civil law tradition have less authority than common law judges, with civil law judges usually being career administrative officials whereas common law judges would usually come directly from a career at the private Bar.⁵

This is to be contrasted with common law systems which rely heavily upon both case-law developed by the courts and statutory enactments.⁶ Only Hong Kong, Malaysia and Singapore have common law systems of the kind that are also found in Australia, New Zealand and Papua New Guinea. Common law systems, therefore, depend upon the existence of a body of case-law which forms the precedents which company lawyers in that jurisdiction would use when a matter is interpreted or litigated. However, as there has been relatively little company law litigation in East Asia, legal precedents from other jurisdictions have often been drawn upon in resolving disputes. Such precedents have been drawn from countries such as Britain, Australia and the United States.

For example, the common law jurisdictions in Hong Kong, Singapore and Malaysia would frequently draw upon authorities and statements of legal principle from the United Kingdom and from Australia. In the more recent reforms of the company laws of jurisdictions influenced by civil law, such as Indonesia, the Philippines, Vietnam and China, US ideas have been drawn upon to some degree, although none of these jurisdictions has slavishly merely adopted foreign bodies of company law; however, this may have been done in earlier times.⁷ US company law ideas have also been influential in Indonesian, New Zealand and Hong Kong reform efforts.

US influences have also been apparent in Japan, Korea and Taiwan through the impact of US postgraduate legal education upon legal practitioners working in the corporate law field. However, even this important influence has not meant that local factors have not had an impact on the form and content of company law ideas adopted in each jurisdiction. This is especially so in jurisdictions based on civil law ideas which have been affected by socialist ideas, such as China and Vietnam, where the categorization of the system becomes considerably more complex. Earlier German legal ideas have had an influence on Japan, Taiwan, Korea and China, whereas earlier Dutch legal ideas have had an influence in Indonesia. What is apparent, however, is that a hybridization of legal systems is emerging in some legal syste...

Table of contents

• Cover
• Title Page
• Copyright Page
• Table of Contents
• List of Abbreviations
• 1 An Introduction
• 2 What is Meant by ‘the Rule of Law’ in Asian Company Law Reform?
• 3 Company Law in Japan
• 4 Company Law in Korea
• 5 Company Law in China
• 6 Hong Kong Company Law
• 7 Company Law in Taiwan
• 8 Corporations in Vietnam
• 9 Thai Company Law
• 10 Company Law in Malaysia
• 11 Company Law in Singapore
• 12 Company Law in Indonesia
• 13 The Corporations Law of the Philippines
• 14 The Company Law of Brunei Darussalam
• 15 Company Law in Papua New Guinea
• 16 New Zealand Company Law
• 17 Corporations Law in Australia
• Index