Regulation and Change in China and Australia – Starting a Business: Regulation and Change in China and Australia – Starting a Business Vivienne Bath Senior Lecturer and Director of the Centre for Asian and Pacific Law Faculty of Law University of Sydney


Starting a business - China: Starting a business - China Rapid growth of the private sector Market changes Rapid rate of legal and regulatory reform Company Law 1994; revised 2005 Reforms of state-owned sector Administrative reforms


Reform and efficiency: Reform and efficiency How can we assess the likely effect of legal and regulatory reform? Can we accurately assess whether it has achieved the desired objectives? What are the desired objectives? Can (and should) regulations be measured? Why? If so, are the World Bank measures useful?


Ranking data: Ranking data


Rankings: Rankings


Starting a business in China: Starting a business in China What entities are available? History – state owned enterprises Growth of the foreign investment enterprise Development of the Chinese private sector Entities available What is the legal basis for establishing a business? Legal regime for state-owned enterprises (including Company Law) Foreign investment legislation Company law of the PRC and regulations issued by the State Administration for Industry and Commerce


Starting a business: Starting a business How easy is it to set up a company? World Bank criteria Time Number of procedures Cost Amount of required registered capital


Starting a business in China: Starting a business in China Other factors relevant to setting up a business Is the law easy to follow? Is the relevant information accessible? Are government officials helpful? Is professional advice necessary?


Starting a business: Starting a business How does the Chinese system compare to other systems – such as Australia? World Bank criteria Is the law easy to follow? Is the relevant information accessible? Are government officials helpful? Is professional advice necessary?


Red tape and reform: Red tape and reform Purposes of regulatory reform To facilitate business and investment To achieve a social purpose or benefit Not limited to reducing procedures – reforms to reduce corruption and improve governance equally important


Regulatory issues: Regulatory issues Australia: tax; triple levels of regulation and licensing; overall proliferation of regulatory requirements China: multiple levels of legislation; unresponsive public service; imposition of extra fees and charges; lack of transparency; corruption


Regulatory reforms - China: Regulatory reforms - China Company Law 2005: reduction of amount of required registered capital; change in requirement of payment up front; increased rights for minority shareholders; improvement of provisions relating to corporate governance and shareholder rights


Regulatory reforms - China: Regulatory reforms - China Administrative Licensing law 2003; new regulations on disclosure of information by government agencies Eliminates redundant licensing requirements Restricts imposition of new licensing requirements Controls implementation of licences – transparency; even-handedness; publication of decisions; availability of information; no extra charges


Regulatory reforms - China: Regulatory reforms - China Regulations on Open Government Information Require disclosure of information by government agencies Citizens may require agencies to provide information Exceptions for state secrets Implementation and enforcement methods unclear