Friday, December 14, 2018

Informal Proceedings: “变化世界中的公司”2018 年国际学术研讨会--2018 International Symposium on The Corporation in a Changing World

I had earlier circulated information about the marvelous conference “变化世界中的公司”2018 年国际学术研讨会--2018 International Symposium on The Corporation in a Changing World, including the program and participant lists in 中国语文 and English (HERE).

I was delighted to be part of this event that considered a range of corporate law related issues from a comparative perspective. These included the challenges of independent board members, of corporate social responsibility, of good governance, of corporate engagement in the world, of the value of corporate codes of conduct, of integration between the commercial and financial sectors, of gender fairness, and of the challenges of corporate groups. My great thanks to the conference organizers and to Ezra Mitchell of the Shanghai University of Finance and Economics.

This post includes my fairly informal proceedings of the Conference, which follows below.

2018 International Symposium on
The Corporation in a Changing World
Hosted by
China Commercial Law Society
Shanghai University of Finance and Economics School of Law
East China University of Political Science and Law School of Economic Law Organized by
SUFE Law School Commercial Law Center
December 8th – 9th, 2018
T8, WuDong Road Campus, SUFE 

Conference Agenda Day One: Dec 8th (Saturday) 

9:00–9:30  Opening Ceremony

Weijun Ge, Professor & Vice Dean, Shanghai University of Finance and Economics School of Law
Opened the conference with words of welcome.

Xiaoyan Song, Professor & Dean, Shanghai University of Finance and Economics School of Law
Dean Song also welcomed the participants.  Over the past year much has happened but delighted to have old and new friends to come together to speak to the complex and emerging issues of corporate law in a rapidly changing world.  Corporate social responsibility and independent directors are vital topics in that conversation. A sophisticated international background is essential now more than ever.  Especially during this time of transition in relations between the U.S: and China there is much scholars can do to bridge the gap and foster solutions.

Xudong Zhao, Professor, China University of Political Science and Law Civil, Commercial and Economic Law School
Also expressed welcome from his institution. He thanks the SUFE leadership for its role in arranging this Conference.  The Conference theme is particularly apt in this time of great change.  As fast as the world changes, corporate law and practice must also adapt. This is especially important in the context of commercial law in the 40 years since the start of the Reform and Opening Up Era. China’s market economy is growing fast and that requires constant attention and reform, so that law remains relevant to practice and the challenges that change brings. In such an era of reform there is a very important pathway, learning from the rest of the world. China has been able to adapt expertise it has acquired from abroad, both for its internal development and to better synchronize with global practice  China is now an innovator as well as a recipient of the values and practices of commercial and corporate law.  One important method to continue this is through internal conferences and workshops, like this one.  This conference provides a significant window for mutual learning.  Now in its second year  has formed its own unique style that has been useful especially for younger scholars. One hopes that this year’s symposium will also produce excellent learning and mutual discussion to develop corporate law principles.  I wish you all great success.

Cindy Schipani, Professor, University of Michigan Ross School of Business

Expressed gratitude for the holding of the conference and thanked the conference organizers for bringing us all together for this important event.  She was grateful for the opportunity to continue the discussion begun last year. Those conversations with representatives form all over the world sparked substantial research  projects and embedding new ideas into current work.  Looking forward to what this conference will add to that conversation.

Yulin Qian, Professor & Acting Vice Dean, East China University of Political Science and Law School of Economic Law
Honor and pleasure to co host this event. Corporation law must be founded on mutual learning because of the way in which economies now interact. Companies also must should corporate responsibility.  We need to strike a balance among the various interest in economic activity.  Themes of corporations and topics of concern contributed by the speakers reflect these concerns.  No longer merely concerned about investment, there is a broader understanding of the interests that must be subsumed within the study of corporate law and practice. Hope that the exchanges will profit form mutual learning and wish the conference much success.
9:30–9:40 Conference Photograph

9:40–12:00 Panel One
Moderator: Xudong Zhao
9:40–10:00 Ciyun Zhu, Professor, Tsinghua University School of Law Corporate Governance of Chinese Listed Companies: Practice and Research Highlights
Corporate governance principles for listed companies was published in 2015 and was reformed again in 2018. Her students collected documents related to the changes to principles of corporate governance worldwide. Focus of talk was on comparative approaches to corporate governance to inform Chinese reform. Reform is required in a number of areas.  One is in the area of the rights of minority shareholders. This requires changes to voting rights, and greater transparency and disclosure mechanisms relating to majority interests, especially with respect to control relationships exercised through proxies or other means.  Reform of dividend rules are another area that requires some consideration. Additionally, the rights to put forward shareholder proposals offers some benefit to shareholders, but it is subject to abuse when used in ways that suggest conflict of interest. Have a long way to go yet.  Should also consider the capacity of supervisory boards.  Should it be shareholder or board centered? Right now it is board centered but perhaps some accountability to shareholder is appropriate.  But what mechanisms? Not clear but they should be directed toward managing incentives toward abuse.  In that respect, the terms of board members require some attention—sometimes board elections are not held regularly, and that should be better policed.  Improving board committees merits attention as well.  Avoid abuse by delegating authority is an important element but other measures of accountability need to be built in as well.   The role of independent directors also is important. Enterprises ought to better report on their CSR but listed companies can be guided to do better. They need to respect rules and otherwise describe /explain why they failed. Xudong Zhao, in comments, noted the difficulty of CSR reporting under the current system. Listed companies will only do what is required either by listing agreements or in law.  That speaks to the value of nonmandatory schemes. 

10:00–10:20 Gongyun Gu, Professor, East China University of Political Science and Law The Governance of Internet Platform Companies
Offered ideas for the governance of internet companies. Two layers of implications of conference theme: (1) the world is changing; (2) companies are also changing. Responds to theme of the Conference by focusing on internet companies. Biggest influence—new types of companies emerged because of the development of the internet.  These companies are distinct from traditional enterprises.  This kind of internet platform company is different because it combines two distinct corporate organizations—the organization of the enterprise itself, and the organization of the platform (where effectively it becomes a regulator or market maker).  This combination produces challenges to governance that combines traditional issues of corporate governance with the issues of government that face a regulator.  To what extent can one separate the regulatory business of the platform, from the traditional profit driven enterprise that manages that governance apparatus?  This is to be distinguished from state owned enterprises because it is to the ownership but the functions of the business that distinguish them from both traditional companies and SOEs.  If that is the case, then how can one approach the issue of corporate governance for the business of market making or of governance? Perhaps one way is to treat internet platform companies the way one treats the business of stock exchanges.  But there are differences. Internet platforms not only make and manage markets, but they tend to regulate the characteristics of the market itself, and they do so in close connection with the imperatives of the state.  He offered some suggestions for governance and reform.  Chinese e-commerce law is one step.  Impose duty to monitor the markets they make; compliance of users, the quality and conduct of the people and businesses that use the platform.  This is a form of governmentalization of the private sector by leveraging regulation through private actors. The internet platform then standing in the role of the state, but the state can go after the enterprise where it fails in its monitoring and controlling functions.  He then provided a typology of internet platform companies—and suggested that compliance and monitoring duties ought to be different depending on the type of platform that is being supported. He noted as well, the government ought to retain certain responsibilities even as it delegates regulatory authority to internet platform companies. He offered the example of shared bicycles in Shanghai where government intervention in the shared bike market caused bankruptcies and reduced the utility of this service rather than to enhance its efficiency. Xudong Zhao, in comments, noted the difficulties of aligning autonomous governance, external governance, and the supervisory role of the government over governance. 

10:20–10:40 Cindy Schipani, Professor, University of Michigan Ross School of Business The Elusive Monitoring Function of Independent Directors.
Looked to the question of the effectiveness of independent board members as gatekeepers in corporate governance. Noted the central importance of the principle of independent director as a foundation of good corporate governance.  Yet scandals continue in all facets of corporate activity—corruption, safety issues, sex harassment, and the like—despite the presence of independent board members in the corporations involved in these scandals. These may point to board failures to comply with its gatekeeper responsibilities.  Contradiction—independence means that such directors are inherently not fully informed.  The information gatekeepers, the officers, are the very people the independent directors are supposed to oversee. Stated with an examination of board independence, then looks to empirical evidence of effectiveness and ended with some suggestions for reform. The ideology posits that independent directors are neutral, unbiased.  That premise produced the expansion of rules mandating independent directors from the 1980s. Courts have deferred to the determinations of independent directors in the area of fiduciary duty.  Perverse incentives—the more directors monitor, the less officers might reveal. Institutional framework may also impede effectiveness of the independent directors. Empirical evidence is mixed. Some evidence reveals the possibility of coopting outside directors by CEOs who may have a hand in selection process, yet outside directors are positively correlated with ousting poor performing CEOs. Her study suggests that independent directors did not appear to have as great an effect on positive corporate governance cultures than might have been assumed. For example, insider trading manifests with both insiders and outsiders on the board.  Their study showed evidence of complicity related to “abnormal” profits. The data indicated that officers, top executives, and outside directors earned similar premiums, suggesting some participation. SOX impacted the rate of insider trading but not by as much as they might have suspected.  Post SOX outside directors still earned 16% premium. Xudong Zhao, in comments, noted that the role of independent directors is problematical in China, at least as currently implemented. He noted that while the Chinese were looking to the US for guidance on fixing the problems of the independent directors, he noted that it seems that both systems requires further study on the matter. 

10:40–11:00 Ezra Mitchell, Professor, Shanghai University of Finance and Economics School of Law The Irreparable Failure of Independent Directors and Boards of Directors in Chinese Listed SOEs and A Workable Replacement
Looked to the issue of independent directors in the Chinese enterprise. He argues that govern the realities of the way that partially listed SOEs operate, then the principle and use of independent directors do not serve their purpose in enterprises in which the state, the CPC, and the private sector meet.  It is not enough to place the forms of independent directors over the realities of the SOE, but rather to embrace the nature of the SOE. He argues that in this context, it makes no sense to keep a board of directors in SOEs, but rather to restructure the SOE in ways that mimic the government apparatus to which it is responsible.  The object is not to create a corporate with Chinese characteristics, but rather to create Chinese corporations.  He briefly described the rise of the independent board in the United States from the 1960s.  He noted the connection between corporate governance reform form the 1960s to political and social changes of that time.  From prioritizing a principle of efficiency and wealth maximization to cultures of compliance and risk management tended to work in the background to move from an insider to outsider set of board governance principles. The process was effectively completed by the end of the 1990s, at least as a n ideological matter.  It was useful not only for internal governance but also streamlined the efficiency of markets for corporate control by commodifying the enterprise. It was at this stage that Chinese corporations began to consider reform. Yet none of the problems that contributed to the shift to independent directors in the U.S. had anything to do with the problems faced by Chinese companies at the time China turned seriously to corporate reform.  Perhaps the U.S. forms might have contributed to ameliorating the most egregious breaches of Chinese corporate practice.  Yet it has little to do with the realities of corporate organization within a Leninist State. Do independent directors make sense at all in China?  Is there a better mechanism?  He argues yes, by placing ultimate authority in the CEO. The CEO’s exposure to discipline by the state, the CPC, and the market, would make for more efficient governance.  In effect, it makes more sense to start with the pre 1960s U.S. position, than to apply the forms of post 1990s U,S, corporate ideological sensibilities. Indeed, collective corporate decision making in China may not need a board—balancing interests is undertaken with the Party units, and worker units, a bard is unnecessary. The contemporary monitoring board does not fit.  More importantly, the principles of democracy inherent in the U.S. board has little resonance with the Leninist principles of Chinese governance.  It should mirror the organization of the CPC and state rather than from the principles of voting for representatives that incorporates political ideologies of the West in its construction. He concluded by suggesting that the Chinese supervision law and anti-corruption laws make a better basis for good corporate governance in China—aligning corporate and political practice with Chinese characteristics. Board. Xudong Zhao, in comments, noted that his approach was broadly in line with some thinking among Chinese academics. He noted especially the problem of legal transplantation in this area.  He noted as well the interesting proposal of importing the anti-corruption laws into the corporate sector.

11:00–11:10 Jianwei Li, Professor, China University of Political Science and Law Civil, Commercial and Economic Law School.  Sharp words about the failure of the supervisory board; but is this a failure that is irreparable? Perhaps it would be useful to find solutions in the current context.  Disagreed about the utility of the use of the Supervisory Law. He agreed that independent directors work differently in Chinese SOEs than in Western SOEs. That difference ought to inform the analysis and may affect the positioning of the CPC within corporate governance in SOEs. Unmentioned was the role of the CPC in private companies, though also worth considering.  The connection with the CPC is indeed worth noting, but the translation of the Supervisory Law to corporate practice would prove difficult. For example, the duty of the CPC is to protect state assets, and not necessarily the interests of small private investors in the partially listed SOE. That produces a conflict of interest that shapes the CPC board relationship. CSRC system appears to work better. Legal system in China not good for independent directors. In practice in regulating everyday work legal transplantation is thus problematic. Still independent directors do still have some use—even if only symbolic. 

11:10–11:20 Wei Yu, Deputy Chief Judge, Shanghai High People’s Court Civil Trial Chamber II. Noted the difficulty of regulating internet platform enterprises, combining market regulation with governmentalization of the sector. He noted that the approach might differ between small platforms and the very few large ones in China. Perhaps using competition law principles. With respect to corporate governance, he noted that listed companies rarely litigate corporate governance issues compared to private companies. At least with respect to listed companies, resolution appears to lie elsewhere than the courts.  With respect to those issues around controlling rights, Judges tend to be cautious in these cases, respecting corporate autonomy, yet are increasingly sensitive to bullying by majority or controlling shareholders.  

11:20–11:30 Gairong Hu, Professor, East China University of Political Science and Law School of Economic Law. Noted the difficulty of reconciling democratic centralism principles in CPC discipline with Board duties in the case where the board member is a CPC member who is asked to vote on a matter with respect to which the local CPC committee has already adopted a position. On the other hand, she noted that it would be difficult to engage in radical change to the forms of corporate governance at this stage; and moreover, that might present problems for the outward activities of Chinese companies. 

11:30–12:00 Open Discussion

12:00–13:30 Lunch

13:30–15:15 Panel Two
Moderator: Yulin Qian, Professor & Acting Vice Dean, East China University of Political Science and Law School of Economic Law
13:30–13:50 Larry Cata Backer, Professor, Pennsylvania State University Dickinson School of Law. Making Sausages?: Internationalized Regulation of Corporate Responsibility and the Reshaping of Corporate Law Through the Lens of Human Rights. Suggested that corporate law was no longer driven solely by its own self referencing ideology. Instead international human rights law has now started driving corporate law, especially with respect to human rights and sustainability issues, in ways that may upend core principles of corporate law and organization.  At issue is the approach to the question: what is the purpose of economic activity? The ideologies of corporate law and governance, and of international law and sustainability, including human rights, differ substantially. The differences were illustrated by considering the provisions of the recently distributed  “Zero Draft” of a Comprehensive Treaty for Business and Human Rights. The implications for Chinese corporate law was also highlighted. 

13:50–14:10 Jian Wu, Associate Professor & Vice Dean, East China University of Political Science and Law School of Economic Law; Protecting Shareholders and Creditors in Corporate Charitable Donation. Charitable donations can be tied to marketing.  How to respond to creditors and shareholders with respect to donations? New Charity Law is silent on the internal mechanisms for corporate philanthropic activities. It tends to be left to the discretion of the enterprise as specified in its charter.  Can shareholders block an intended board donation decision? Corporate law permits the articles to give the authority either to board or shareholders.  Most articles fail to specify the mechanisms. That produces problems. Art. 74 and 104 of the Company Law offer some help but are ambiguous, especially where the donation is opposed for reasons of breaches of duty or corporate waste. The issue of corporate waste is a difficult one in Chinese law, especially in the context of excessive donations. Tax law has something to say about this as well.  In that it shows some parallels to Delaware law of charitable contributions.   

14:10–14:30 Barnali Chouhdury, Senior Lecturer, University College London Faculty of Law; Corporate Duties to the Environment. Not duties (e.g. legal obligations), but rather responsibilities (e.g., soft law). She started with the case for corporate responsibility for the environment.  This is grounded on corporate power to impact environment. Primary responsibility belongs to states, responsibility to corporation, and also to individuals.  She turned to the tension between profit and planet conflict, paralleling Backer’s fundamental tension in purpose of economic activity (as an ends for investors versus as a means for collective welfare).  There is a business case for corporate responsibility for corporate responsibility for the environment. Looking for a win-win situation.  Concern—this risks commodifying environmental concerns. One might also privilege only environmental concerns that align with corporate economic goals. And it may create incentives toward greenwashing. To overcome this, she makes am intergenerational equity rationale—that long term time horizon is critical in corporate decision making sensitive to environmental responsibilities. If that is taken as a baseline, then what are corporate responsibility to the environment? No one defining instrument, no analogue to UNGP. But due diligence obligation transposes to the environmental area (environmental management system: duly diligent to prevent harm). As the bottom line corporations ought to embed environmental considerations at all decisions—at board level. Three options offered: (1) board environmental committee; (2)  environmental advisory panel staffed by experts and reporting to the board; (3) independent director for environmental issues.   
14:30–14:40 Xujun Gao, Professor, Tongji University Law School.  He noted that making sausages might produce something tasty but the process is complicated, but in the course of cooking you may not like what you see. The Zero Draft approach was critiqued. He noted that there were substantial implications for Chinese companies.  The extensive jurisdiction, transparency and other provisions were noted. He also noted the importance of the difference between the official policies of the United States with respect to the Zero Draft  (negative) and those of its intellectuals (supportive). The amorphous nature of human rights would cause trouble.

14:40–14:50 Shan Jiang, Deputy Chief Judge, Shanghai Putuo District People’s Court. He provided detailed commentary on the operation of the Charity Law on the management of charitable giving by corporation.  He noted the interplay between legal regimes and social norms in the regulation of charitable given.   

14:50–15:00 Jian Fan, Lecturer, Shanghai University of Finance and Economics School of Law. First summarized the ideas of Chouhdury. And then he provided his own insights.  He noted the sometimes difficult balancing between economic and environmental goals.  The illustration was the decision of Beijing to allow coal fired plants to operate, causing severe pollution in Beijing, in order to avoid threatening the livelihood of its workers. The prudence principle in environmental decision making was also discussed. He noted that China had a longer way to go than in the West in this respect.

15:00–15:15 Open Discussion

15:15–15:30 Break

15:30–17:15 Panel Three
Moderator: Zhongxiao Yang, Professor & Director of Development Planning Department, East China University of Political Science and Law
15:30–15:50 Jean du Plessis, Professor, Deakin University Law School. Delving deeper into some recent corporate collapses: Have voluntary corporate governance codes failed us?
Confronts the quite controversial issue of the utility of corporate governance codes.  These had been very much in favor since the end of the last century as a set of guides to aid corporations in reforming their corporate cultures and aligning them with governance ideals. The Cadbury Commission Report of 1982 and its Code then gave birth to similar efforts worldwide.  He looked at the Hong Kong Code but focused on the Australian one: 8 general principles of corporate governance principles. Most principles grounded in soft law approach. Enforcement by stock exchanges through listing rules and soft enforcement. The principle of comply or explain at the core of all of the CG codes.  Focus on non-executive (independent) directors. Listed companies must have an audit committee. Driving forces; (1) scandals; (2) retain competitiveness; (3) avoid black letter law; (4) corporation self-determination. He then turned to two case studies to consider the effectiveness of these CG codes. The first was Steinhoff in South Africa—a global retailer listed on Frankfurt and Johannesburg exchanges. The collapse occurred in 2017 with a German local investigation of CEO. CEO resigns; stocks fall, losing 10.3€ in 3 days. Steinhoff was organized as a complex interlocking set of enterprises. With he debts mounting why did no one pick this up? Two tiered board structure with a supervisory function did nt work because of relationship among members. Lawsuits filed against controlling individuals.  What went wrong? What did the CG Code do for the enterprise? The second was the Carillion Company a UK enterprise, 43K employees worldwide. Huge debts and government contracts when they collapsed. Massive failure of corporate governance at all levels.  Gross financial mismanagement. As it collapsed, they increased salaries and dividends.  He argued on that basis that soft law does not work; that CG Codes need to be rewritten to reflect the times; time to rethink shareholder primacy model. 

15:50–16:10 Feng Deng, Professor, Peking University Law School. Industry Controls Finance in the form of Corporate Group: What’s the Problem?
In China the problem is understood as the integration of economics and finance.  At the 1st level there are 3 phenomenon; (1) private dominant companies; (2) big SOEs; (3) multinationals with internal financing or financial institution arm. What they have in common is that parent engages in industrial business but with subsidiaries that have licenses to engage in financial business.  From 2004 there was a big increase in the number of companies in the financial business embedded within larger enterprises, or have shares in such companies. Provided statistics about ownership among SOEs. They have integrated their industry and financial operations. By the end of 2015 there were up to 224 entities as financial subsidiaries. Why enter into this sector? High profit margins, and substantial monopoly position –barriers to entry are high. Aided by local governments seeking to increase the number of top 500 companies in their territory. Central governments encouraged because it appeared to help the financial position of operating companies as well. The principal issue here goes both to the corporate governance and conflict of interest in the context of financing—augmented where the SOE owned a financial institution—and the related problem of anti-competitive activity.  But the other is the broader structural problem of financing policy and the management of macro issues in economic policy. The only comparable model is the Koncern concept in German law. Otherwise unprecedented. In 1993 adopted US model of banking law. The twist was the way that the industrial companies began to control the financial companies. In 1994 law was reformed to try to reduce ability of industrial companies to invest in financial institutions slightly harder but by 2010 the integration was strong.  No one knows how to deal with this model.  What are the risks of industrial companies controlling banks and other financial institution. He offered several solutions to the problem of this sort of integration. 

16:10–16:30 Mutsuhiko Yukioka, Associate Professor, Kobe University Graduate School of Law & Faculty of Law. “Parent-Subsidiary Listing” – A Brief Overview of Corporate Governance Issues.
Unique Japanese phenomenon. Issue touches on questions when both the parent and the subsidiary are listed on stock exchanges.  This form of dual listing commonly used to structure corporate groups in Japan.  The structure was debated before Japanese corporate reform in the early 2010s.  Characteristics: controlling block held by parent company while the rest of the shares are widely held. The parent company’s shares are also widely dispersed. No individual or family that controls the corporate group. Absence of ultimate control a distinguishing feature. Fairly prevalent in Japan. 10.9% of companies have a parent company (383 companies out of 3507 listed on Tokyo Exchange). More than 80 % of listed subsidiaries have a listed parent. Why adopt this structure?: (1) increase incentive for sub’s management and employees; (2= market price of sub provides additional monitoring device; (3) parent can maintain the synergies from the group; (4) capital raising becomes easier.  This raises corporate governance issues: (1) managerial agency problems mitigated by parent’s monitoring effects; the horizontal agency problem between the controlling and minority shareholders tend to arise. With respect to the last, the controlling shareholder may abuse its influence in pursuit of its own interests. Fiduciary duties of controlling shareholder not recognized; derivative actions nor class actions permitted. This puts minority shareholders in a bad situation. But dispersed ownership of the parent may mitigate against risk of abuse. The reputational risk to the parent may also produce incentives against abuse. He then discussed the 2014 reforms: hotly debated.  Moderate procedural reform—more disclosure of conflict transactions, and narrow definition of outside director. But there were strong arguments against regulatory reform: (1) not clear that minority shareholders were systematically harmed; (2) costs of imposing duty would be large compared to the benefit; (3) to determine the desired level of legal intervention is very difficult. Concluding remark: path dependency affected the debate and the outcome.
16:30–16:40 Jing Leng, Professor, East China University of Political Science and Law International School of Law and Finance.  Commented on Du Plessis presentation. She noted that China has a CG Code just recently reformed in 2018.  She noted the driving forces described by du Plessis and speculated that focusing on the bad actors missed the stories of successes. Yet case study does not prove persuasive in light of lack of empirical research.  She posed unsettled question; (1)  while du Plessis noted in the case study that no one picked up over indebtedness, yet high leverage rates are not unusual among industries; (2) regarding effectiveness of soft law approach; two recent cases is too small a sample; in addition, even soft law can be hardened by contract. 

16:40–16:50 Ke Chen, Chef Judge, Shanghai High People’s Court Enforcement Chamber. Commented on Deng presentation. He focused on issues of intra-group governance. In that context might all group be united by a single obligation to maximize the group’ interests,  He then considered Yukioka’s paper and considered the issues of multiple subsidiary listing. He agreed that transparency was critical. 

16:50–17:00 Dongguang Wang, Associate Professor, East China University of Political Science and Law School of Economic Law. Focused on Yukioka’s presentation. He raised efficiency concerns.  And further noted that changing the perspective o efficiency changes the analysis. He did not think that conflict of interest was necessarily large. Yet minority shareholders solicitude is grounded in vulnerability. But all such rules do not get to the heart of the problem, which is inherent in the nature of their ownership interest. Perhaps alternatives exist besides giving them voting rights; are there not more practical solutions to their vulnerability? That is worth exploring. 

17:00–17:15 Open Discussion

18:00 Conference Dinner

Day Two: Dec. 9th (Sunday) 

9:00 – 11:20 Panel Four
Moderator: Ziliang Xu, Deputy Chief Judge, Shanghai Baoshan District People’s Court
9:00 – 9:20 Roseanne Russell, Lecturer, University of Bristol Law School The corporation in a changing world: Companies and the rise of neoliberal feminism
Speaking to issues of companies and feminism. Theme: women are good for business. Rise of a trend in popular culture of powerful women discussing issues of gender in business. The coincides with rise of neoliberal feminism; Sandberg “lean-in” manifesto of self-empowerment and self-investment; Ivanka Trump speaking to life changing journey as mother and entrepreneur.  These high-profile interventions appear positive, but Russell is more cautious.  She maintains the focus on women in its current guise is deeply problematic.  It is grounded in woman as stock framework, or as a form of gender capital.  Women treated as instrumental, and that ought to trouble. This has the collateral effect of pushing other voices to the margin.  Need to return to key feminist ideas of early debates that speak to injustice. She first describes “neo-liberal feminism”: focus on self-empowerment (does not challenge the structures of work), equates women with feminism, closely aligned with market idea (tends to reward those at the top of the economic ladder), highly seductive (e.g., “my best self;” “be a better you”, etc,; encourages people to turn themselves into brands).  Different from liberal feminism and relational feminism.  These differences inform the current gender based governance debates (e.g., women in the board room on a diversity framework). Selling idea of women empowerment by selling women on the idea of finding emancipation in the market. This can be traced back to the ideology of shareholder (usually short term) welfare maximization. The two ideologies converge.  But this is a political choice rather than a jurisprudential truth.  But this allows us to make other political choices in its place. She ends by suggesting the way that feminism might provide a way forward: (1) recognize corporate dependencies in unpaid labor, especially care (the ideal worker supported by support at home; culture of overwork); (2) acknowledge complex dependencies created by globalization (migration bringing in cheap labor as women leave home but need to purchase care); and (3) reform corporate purpose (proportionality principle in the Equality Act of 2010 a model?).   

9:20 – 9:40 Eli Bukspan, Senior Lecturer, The Radzyner Law School of the Interdisciplinary Center in Herzliya; Class Actions and Class Actions Public Fund.
The “class action funding” fund is both a model fo its kind and a laboratory for considering the normative issues of corporate discipline through litigation.  He started by reviewing the role of class actions as a disciplinary technique—vesting disciplinary power not in the state but in the shareholders through collective action. The extent to which that collective right to remedy is broadened provides a substantial modality for accountability in corporate governance and social responsibility issues. He noted the rise of class action as a vehicle for vindicating constitutional rights (Brown v. Board of Educ.). China has one of the few legal systems aside form the US that permits class actions in line with its collectivist traditions.  Class actions, of course, are inhibited by limitations on scope, by procedural rules, and by the costs of maintaining collective action. Israel has a relatively young class action law  but it has produced a substantially effect.  It is intended to promote a variety of objectives. He argues that the objectives were broad enough to include social and public issues against business corporations in the conduct of their economic activity. That possibility is enhanced by the Israeli Class Action Fund, provided to enhance the use of class actions.  He described the organization of the fund.  The Fund Committee represents many sectors of society. Fund does not engage in securities class actions (there is another fund for that). He noted a correlation between financing by the fund and the chance of a suit’s success, though it is not clear that there exists a causation effect. Fund use approval varied over a variety if rights, mostly consumer related and insurance claims. He gave some examples (e.g., discrimination against women, discrimination against Arabs, environmental claims, etc.). He then turned to the broader normative implications: eroding separation between public and private law (class actions and CSR); use as a substitute for state regulation (more efficient means of regulation than law or markets), and complements civil and criminal actions by the state. It is this last normative point that he then developed. Tied in to the UN Accountability and Remedy Project started in 2014. Class actions would improve access to justice through well-ordered judicial mechanisms. 

9:40 – 10:00 Lei Duan, Associate Professor, East China Normal University Law School
The Reform in Share Repurchase Rules and Its Influence: Comparing with Japanese Law
His focus was on the changes to share repurchase laws, comparing Japanese efforts with those of China. He elaborated three principal areas: How was the corporation law amended, how will it influence listed companies, what problems remain unresolved for future direction of reform. With respect to the first, he reviewed the six principal areas of reform.  Wirth respect to the reform itself, he noted its objective to simplify procedures and to make the device more flexible. Also public companies can use repurchases as a means of dividend distribution. Dividend payout useful to shareholders especially with respect to tax implications. It also affected considerations of corporate finance, creating incentives for the issuance of convertible securities. Lastly, still to be resolved is the issue of fairness among shareholder classes. Another issue relates to the availability of this mechanism to public companies; the issue of fairness for private companies remains unresolved.  In Japan there is regulation  that may suggest a way forward—focusing on transparency and equal access to buy back schemes. But fairness to shareholders remains the central issue, and the avoidance of strategic actions that may effectively freeze out minority shareholders. Spoke as well to the utility of “tag along” rights for shareholders. As well the need for a “wrap up” clause was noted. Going forward, it remains to be seen whether listed companies will use this mechanism as a defensive tactic against hostile acquisitions. 

10:00 – 10:20 Fan Yang, Partner, King & Wood Mallesons. Practice and Unique Problems of Valuation Adjustment Arrangement in China.
 Shared experience in valuation adjustment arrangements in China. In China valuation adjustment is broad, including put options triggered by conditions negotiated in contract. These shareholder buy backs are useful. China does not fully recognize effectiveness of cases, but beyond that there is little clear guidance,  Supreme People’s court cases are quite useful despite their lack of legal effect. He discussed the leading cases that flesh out the issues and approaches to valuation adjustment (e.g., Haifu v Shiheng, Wisdom Asia and Lu Bo (the Haifu case)) dealing with VAM (valuation adjustment mechanisms demanded by private equity investors and the cases that then developed those principles since 2012. Other leading cases were discussed, fleshing out approaches to interpreting ambiguity in the legislation and regulations. VAMs now ubiquitous, as a basic protection for investors. In the past it was limited to companies going public, but now more widely used, especially when connected to share buy back when contingencies fail. It is an alternative to taking over the company, which investors sometimes are not interested in doing. He then turned to unique issues in China.  The first includes issues touching on foreign companies.  VAM was problematic especially where all aspects of transactions were reviewed and approved by the state regulators.  But that has changed since the revision of law that has reduced the scope of government review. The second concerns the triggering mechanisms for VAMs.  There is a strategic dimension, and especially where the difficulties arise from political conditions (trade war, local violence, etc.).  The role of force majeur remains unresolved (market risk versus triggering even).   
10:20–10:30 Wei Shen, Professor & Dean, Shandong University Law School. Commented on Prof. Russell’s presentation.  Noted that the background of corporate law did not fit well within the analysis.  Placing liberal feminism within this context raises a contradiction with the profit maximization principle.  Thus, it was understandable the need to advocate reform of core corporate purpose principle.  But that may be a near impossible project. Major argument in favor is gender equality, but wondered whether efforts to correct gender inequality can create greater inequality.  Noted the problems of affirmative action programs in that regard. He noted issues of practical effect: does it actually improve corporate governance as a whole.  There are some empirical studies focusing on Nordic states. He wondered about the viability of women as stakeholder in that context gender inequality might be easier to frame.  Globalization makes feminism issues more complex.  With respect to Professor Bukspan’s presentation, he wondered about the characterization of the program. Unsure why the fund is addressed to private enforcement, trying to link to public enforcement. Second question related to the use of the fund—does it increase caseload, and thus reduce quality of judgement? Does it achieve its purpose; and are more class action cases good for society. The issue of societal versus corporate welfare may require more thought. He noted parallel issues in China, noting the difficulties of the class action device in China in the face of political and societal constraints. In that case the issue of using court cases might promote social instability, an issue that may be different from the context of Israel. 

10:30-10:40 Xiaoning Li, Associate Professor, Fudan University Law School. With respect to Professor Russell, she noted the trend of highly educated women in China to go back home to raise children. The issue is to get these women back to work in the face of social custom and constraints. This includes fostering idea of fathers staying at home, and more flexible work time. In China there may be a CSR issue about corporate provision of child care and elder care for employees. With respect to Professor Bukspan, she noted the differences between Chinese and Israeli approaches to class actions.  Major difference is the use of an opt in rather than an opt out role. With respect to the other presenters she noted the difficulty of finding sources in Chinese law.  She noted that the Supreme People’s Court attitude has been changing. Article 142  of Company Law should help understand the place of VAMs.  Is the problem that all of these are really forms of distribution and ought to be treated as such.  If it reduces the net value of the company, would that impair capital, and should that be the basis of the analysis?

10:40 – 10:50  Daile Xia, Lecturer, Shanghai University of Finance and Economics. For Prof Russell, she was more interested in the feminism part.  Reminded her of the progress of gender equality in China. Wondered what kind of difference more women leaders will bring.  More research needed.  But that suggests that women are different than men, and thus they will stress different thing and approach issues differently. But are they educated and nurtured to be different; does gender equality on that basis then reinforce gender differentiation in nurture? For Prof. Bukspan, she asked whether there are studies that point to who benefits from the funds? She wondered whether it was the lawyer class rather than the plaintiffs who were the primary beneficiaries. For Prof. Lei, she agreed with the general approach. Seems the legislator paid more attention to conflict of interest between shareholders than between the company and shareholders.  That ought to be considered. She also noted the changing interpretations of the Supreme People’s Court, criticizing some of the recent decisions. She noted, with respect to Mr. Fan’s presentation that a debtor-creditor model might be a better basis for analysis.
10:50 -11: 20 Open Discussion

11:20 – 11:30 Closing Ceremony
Moderatr: Hongtao Sun, Professor & Vice Dean, East China University of Political Science and Law, School of Economic Law
Speakers: Larry Cata Backer, Professor, Pennsylvania State University Dickinson School of Law
Closing Remarks
“Since the start of his leadership, President Xi Jinping has emphasized the Chinese principle of mutually beneficial cooperation. That policy has been the cornerstone of Chinese foreign policy since the establishment of the People’s Republic in 1949, and is at the heart of China’s Go Out Policy, and now its Belt and Road Initiative.  It is central to socialist modernization and an essential part of the approach to the fundamental contradiction of the New Era—the contradiction between unbalanced and inadequate development and the people’s ever-growing needs for a better life. These three principles, mutually beneficial cooperation, global engagement, and fairer distribution of the fruits of economic activity, are also central issues in the West. 
This Conference was filled with that spirit of mutually beneficial cooperation, global engagement, and fairer distribution of the fruits of production. And for that we are grateful to the leadership of SUFE and the conference organizers, the China Commercial Law Society, Shanghai University of Finance and Economics School of Law, and East China University of Political Science and Law School of Economic Law. Special thanks to the organizer SUFE Law School Commercial Law Center, Dean Song, Acting Vice Dean Qian, Vice Dean Sun, and my old and dear friend Ezra Mitchell.
The conference brought together scholars from around the world. We considered the challenges of independent board members, of corporate social responsibility, of good governance, of corporate engagement in the world, of the value of corporate codes of conduct, of integration between the commercial and financial sectors, of gender fairness, and of the challenges of corporate groups. Through their careful scholarship our conference scholars demonstrated the ways that mutually beneficial cooperation can become part of the working style of academic engagement across borders and systems, and the way in which such mutually beneficial cooperation sits at the heart of the study of finance and economics, generally—and of the study of corporations in particular. We will spend the next year thinking carefully about the many themes explored during this conference, taking advantage of the many ways in which, we continue to learn from each other." For that I am truly grateful.
Thank you.

Ezra Mitchell, Professor, Shanghai University of Finance and Economics School of Law. 
Thanked all participants and hosts.  Looking forward to next year.  Noted the great spirit cooperation and shared learning that can be possible under these circumstances.

11:30–13:00 Closing Lunch


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