International Developments

Davis Polk Discusses Tighter China Controls Over Crypto Transactions

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The PRC appears to be further tightening controls on cryptocurrency activities.  On September 24, 2021, the People’s Bank of China (PBoC), China’s central bank, issued the Notice Regarding Further Prevention and Management of Risks Associated with Cryptocurrency Trading Hype (September 2021 Notice) jointly with nine other Chinese national government bodies[1].

The September 2021 Notice prohibits (i) overseas cryptocurrency exchanges from providing services to residents in mainland China and (ii) individuals in mainland China from working for overseas exchanges as their employees., and bars companies and individuals from providing marketing, payment, settlement services or technical support to … Read more

Kirkland & Ellis Discusses Cross-Border Transfers of Personal Data

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In the wake of the landmark judgment in Schrems II in July 2020 (which invalidated the EU-US Privacy Shield with immediate effect) (as reported by us here), the European Commission has recently adopted a number of hotly anticipated (at least in the privacy world!) decisions that re-adjust the framework for transferring personal data from the European Economic Area (the “EEA”) to countries outside the EEA (“third countries”) and the United Kingdom.

These decisions include:

  • an implementing decision which approves a new form of Standard Contractual Clauses (the “New SCCs”) for legitimising transfers of

… Read more

Kleptocracy Through Weak Governance at State-Owned Corporations

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1Malaysia Development Berhad (1MDB), a state-owned company purportedly established for the benefit of the Malaysian people, was a vehicle for former Prime Minister Najib Razak to steal billions of dollars over close to nine years.  Called “kleptocracy at its worst” by then-U.S. Attorney General Jeff Sessions, the scandal raised the question of why Malaysian corporate law, modeled on international standards, failed to safeguard against expropriation of such magnitude.  In my new article, I explore this question, highlighting how corporate governance frameworks can be strengthened to guard against similar debacles.

The Doing Business 2020 index ranks Malaysia as second highest … Read more

Why Singapore Exchange’s Embrace of SPAC Listings Is a Game Changer

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On September 2, 2021, Singapore Exchange (SGX) released the “Proposed Listing Framework for Special Purpose Acquisition Companies” that officially permits the public listing of SPACs on its mainboard. The move aims to cement Singapore’s status as Asia’s top financial center, attract lists of regional unicorn companies in the tech industry, and satisfy the appetite of local high net-worth investors for higher-risk investments.[1] On September 17, the Singapore government launched a S$1.5 billion (US$1.1 billion) investment fund backed by Temasek Holdings, the city state’s investment firm, to boost its stock markets by injecting money in high-growth companies and … Read more

Debevoise Discusses the Proposed Anti-Foreign Sanctions Law in Hong Kong

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The possibility of an Anti-Foreign Sanctions Law being implemented in Hong Kong has recently attracted significant attention in the region. The precise scope and ambit of the contemplated law is currently unclear, as is the proposed timing for its implementation. Whilst we await the details, it is nevertheless prudent for businesses in Hong Kong to begin to consider the potential operational and legal implications that might arise.

For these purposes, it is helpful to understand some of the background to the law and its possible provisions. As such, this briefing note summarises:

  • the implementation of the Anti-Foreign Sanctions Law in

… Read more

Debevoise & Plimpton Discusses Expanded Horizons for Class Action Litigation in the UK

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Mass claimant litigation is on the rise in the English courts, with multinational companies in particular facing ever-growing exposure. While large class action suits are relatively common in jurisdictions such as the United States and Australia, until recently these actions have not been a prominent feature of the United Kingdom’s legal landscape.

A series of recent decisions have significantly broadened the scope and enhanced the viability of mass claimant actions in England and Wales. On 18 August 2021, the Competition Appeal Tribunal (the “CAT”) handed down its decision in Walter Hugh Merricks CBE v Mastercard Incorporated and Others [2021] CAT … Read more

Cleary Gottlieb Discusses Final Rules For UK-Listed SPACs

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On July 27, 2021, the Financial Conduct Authority (“FCA”) published a policy statement that includes final rules amending the UK Listing Rules, and new associated guidance, applicable to special purpose acquisition companies (“SPACs”).[1] The new rules and guidance came into force on August 10, 2021.

The final requirements are based on the FCA’s earlier consultation launched on April 30, 2021 (the “Consultation”).[2] The Consultation’s proposals focused on the presumption of suspension of trading for a UK-listed SPAC that (under the prior FCA rules) would be triggered when the SPAC announced an intended … Read more

Institutional Investors in China: Corporate Governance and Policy Channeling in the Market Within the State

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The extraordinary rise of China’s economy has made understanding Chinese corporate governance an issue of global importance. A rich literature has developed analyzing the Chinese Communist Party’s (CCP’s) role as China’s largest controlling shareholder and the impact that this has on Chinese corporate governance. However, the CCP’s role as the architect – and direct and indirect controller – of institutional investors in China has been largely overlooked in the legal literature.

This lack of focus on institutional investors in Chinese corporate governance may have made sense two decades ago. At that time, in listed Chinese companies, institutional investors’ shareholdings were … Read more

Comparative Corporate Governance

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With the increasing internationalization of law and legal scholarship, comparative corporate governance has seen a burgeoning volume of research from a practical, theoretical, and empirical perspective. Practically speaking, both internationally and within individual countries, most corporate governance research deals with the interaction between board members, officers, and shareholders, primarily in large, publicly traded corporations. Much of the literature is preoccupied with reducing conflicts of interest between shareholders and management and consequently minimizing agency cost, vindicating the narrow finance perspective. Given the predominance of controlling shareholders around the globe, the literature increasingly focuses on conflicts between controlling and minority shareholders. In … Read more

Transnational Migration of Laws and Norms in Corporate Governance

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In a recent working paper, I explore the intersection of contemporary corporate governance and transnational law. Transnational law is, of course, far from a settled concept. For early theorists, it involved conduct or events that crossed national boundaries. More recent scholarship, however, has focused not on what is being regulated, but rather on how laws and norms are transmitted between supranational and local levels.

Corporate governance fits naturally within this modern conception of transnational law. Today’s corporate governance is highly fragmented and includes a complex array of public and private actors. It also embodies legal and non-legal elements, which operate … Read more

Debevoise & Plimpton Discusses the State of the LIBOR Transition

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On March 5, 2021, LIBOR’s administrator, ICE Benchmarks Administration (the “IBA”), and LIBOR’s regulator, the U.K. Financial Conduct Authority (the “FCA”), announced that LIBOR will no longer be provided (i) for all sterling, euro, Swiss franc and Japanese yen settings, and the one-week and two-month U.S. dollar settings after December 31, 2021 and (ii) for the remaining U.S. dollar settings after June 30, 2023. On March 8, 2021, the Alternative Reference Rates Committee (“ARRC”) confirmed that the IBA and FCA announcements constitute a “Benchmark Transition Event” with respect to all U.S. dollar settings under the ARRC recommended fallback language for … Read more

The Restructuring Landscape in Emerging Markets One Year into the Pandemic

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Like advanced economies, emerging economies were buffeted by the global economic slowdown stemming from the COVID-19 pandemic and the associated lockdowns of national economies. In 2020, emerging economies (and developing countries) contracted by 2.1 percent (their steepest decline in many years), but the decline was not as severe as in advanced economies (-4.6 percent), according to the latest data from the International Monetary Fund (IMF), released in July 2021 as part of its World Economic Outlook Update.

Emerging economies and developing countries taken as a whole are expected to experience a major rebound this year, with anticipated growth reaching … Read more

Cleary Gottlieb Discusses Recent Decisions Highlighting Legal Privilege Protections

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Two recent decisions on the scope of legal privilege in the United States and Europe have once again demonstrated the importance of understanding fully the scope of legal privilege in the jurisdictions relevant to companies’ operations.

In the United States, a ruling from a Federal Court in San Francisco denied legal privilege to Elizabeth Holmes – founder of the beleaguered and now-dissolved medical device start-up Theranos Inc. (“Theranos”) – over 13 communications between Ms Holmes and the law firm Boies Schiller Flexner (“BSF”) on the basis that the privilege belonged to the company, Theranos, and not to Ms Holmes personally.… Read more

Debevoise & Plimpton Discusses European Commission’s Views on Sustainable Finance Disclosures Regulation

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The European Commission (the “Commission”) recently issued long-awaited answers to questions raised by the European Supervisory Authorities earlier this year on the Regulation on Sustainability-related Disclosures in the Financial Sector (“SFDR”). This Update covers answers to questions that relate to some key areas of legal uncertainty under SFDR. While the explanations are welcome, a number of answers do not provide the clarity expected.

SFDR applies to non-EU AIFMs. In line with market understanding, the Commission confirmed that, under its interpretation of SFDR, “financial market participants” that are in the scope of SFDR include non-EU alternative investment fund managers (“AIFMs”) … Read more

Sullivan & Cromwell Discusses SPACs in the UK

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On July 27, 2021 the FCA published a policy statement setting out its planned amendments to the Listing Rules to remove the presumption of suspension that applies to special purpose acquisition companies (SPACs) when a potential acquisition target is identified (the ‘de-SPAC’ transaction), subject to certain investor protection features. These changes are geared towards making the London Stock Exchange a more attractive listing venue for SPACs and follow the publication of the UK Government’s review of the UK listing regime, as discussed in our client memo of March 3, 2021, and the subsequent consultation by the Financial Conduct Authority (FCA) … Read more

National Blockchain Laws Are a Threat to Capital Markets Integration

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Since its creation in 2008, the blockchain has seemed incompatible with legal constraint. Satoshi Nakamoto, the pseudonymous inventor of Bitcoin, hailed the blockchain’s “unstructured simplicity.” Even now, apostles of distributed ledger technology (DLT) strongly resist the idea that it needs regulation, arguing that it was designed precisely to avoid centralized control.

This did not, however, stop courts and legislators around the world from becoming increasingly concerned about DLT. They are no longer focusing only on the dangers cryptocurrencies might pose to the public, such as its potential use in money-laundering, the financing of terrorism, or tax … Read more

Corporate Social Responsibility by Joint Agreement

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Voluntary industry-wide agreements have recently emerged as a way to promote corporate social responsibility (CSR). Competitors in industries as diverse as chocolate production, fashion design, and truck manufacturing aspire together to pay fair wages or transition to less polluting products. A growing management literature endorses the idea. Henderson (2020), for instance, calls for “industry-wide cooperation” to stop environmental degradation and economic inequality.

Joint decision-making allegedly would help reduce first-mover disadvantages that can dissuade companies from acting responsibly if it puts them at a competitive disadvantage. Firms coordinating their business decisions, however, raises antitrust concerns. To believers in the effectiveness … Read more

A Social Enterprise Company in EU Organizational Law?

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In my recent article, A Social Enterprise Company in EU Organizational Law?, I discuss the present and future regulation of social enterprises in Europe. For the moment, social enterprises – like other “social economy” organizations – have been harnessed to act as surrogates for governments in coordinating the administration, financing, and implementation of domestic social and welfare policy.[1] To a greater or lesser extent, therefore, social enterprises are regulated domestically by individual member states of the EU (“Member States”), “with little private leeway for initiative-taking outside government policy”.[2] This means that social enterprises do not enjoy the … Read more

The Choice Between Various Freeze-Out Procedures and Its Consequences

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Over the past two decades, delisting from an exchange has become a popular choice for many public companies. Several studies attribute this trend to a number of factors, including the increased concentration of U.S. markets, which made many small and medium size public firms less viable; tightening of regulatory requirements (SOX, for example); and emergence of capital-raising alternatives for small and medium size private firms (for example, private equity funds). In sum, the net benefit of staying an exchange-listed firm has diminished, and various going private legal procedures have become popular.

The most common delisting method in the U.S. is … Read more

Do Firms in Developing Countries Use Dividend Policy to Build Trust with Investors?

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How do companies based in countries with weak government institutions earn the trust of minority investors and raise capital? Where the rule of law and government enforcement cannot control corruption, insiders seem free to expropriate their company’s resources, making it essential for them to somehow assure  potential outside investors that they can be trusted. Establishing trust is especially important for growing firms that have profitable investment opportunities and are most in need of external capital.

One promising approach to building trust might be to pay a dividend – there is credibility in cash. However, paying a fixed dividend consistently, as … Read more