Principle Of Good Faith In The Realization Of Rule Of Law In Security Market

This article was a truly original attempt to investigate the realization of rule of law in the security market in the perspective of good faith principle within the realm of law. In the present excellent situation of security market, the problem of absence of good faith in the security market has cried out for immediate solution. There's no way to solve the fundamental problem, if just at the specific system and execution. The Securities Law ought to obey the fundamental spirit of principle of good faith, and it is essential to carry out principle of good faith consistently and unfalteringly in the implementation of Securities Law. This article researched the mechanisms and systems which are used to make the principle of good faith in the security market achieved, on the basis of exposition of carrying out principle of good faith being significant for the realization of rule of law in the security market.The contributions of this article can be summarized as follows:Firstly, in terms of the research perspective, abstract,comprehensive and macroscopic perspectives have been adopted, which can make up for the microscopic, concrete,and unitary perspectives.Secondly, on the research methods, this article makes an attempt at using many methods, including economics, law and so on.Thirdly, a setting forth of various basic theories of good faith principle in the security market is made. The article is composed of introduction and five chapters:The introduction has two parts: one is to seek the penetration point for this article, which is the current situation of absence of good faith in contemporary Chinese security market. The result of the article is to construct the system which fulfills the principle of good faith in the security market. The other hand is to conclude the legislative state of principle of good faith in the security market and the research situation of principle of good faith in the security market in current Chinese academic circles. While connecting the theories to practice, continue the present research into deeper degree.The opening chapter gives a general theory of principle of good faith in the realization of rule of law in security market. Founded on the statement about the connection between good faith and rule of law, or principle of good faith and rule of law, the author dived into the fact that principle of good faith is important to the realization of rule of law in security market. Good faith and rule of law have close relationship. Good faith and rule of law not only have the logical connection, but also good faith and rule of law have mutual reaction. On the one hand, good faith produces the rule of law, offering value grounds and moral premise for evaluation law; on the other hand, the rule of law gives the good of faith a great push forward. The good of faith of law in an early stage of development have a strong moral, inner and subjective characteristic, which is born from the good of faith of morality. The gradual development of market economy makes the good of faith gradually whole, socialized and outer. Good of faith being lawful gradually makes the relationship between principle of good of faith and rule of law more closely. That is because principle of good of faith is the important guarantees for legitimacy of rules; principle of good of faith overflows several spirits about rule of law; and principle of good of faith is the anchor of operation stages of rule of law. On the ground of the basic theory, this article concentrates energy on principle of good faith in the security market law. After analysis of the connotation, position, and essence of principle of good faith in the security market law, the author considered that principle of good faith in the security market law is important of realization of rule of law in the security market. That is because principle of good faith is the real basis of realization of rule of law in the security market, and principle of good faith is a bridge to connect the security market's internal self-discipline with external supervision.Chapter 2 reviewed the developments and achievements of good of faith in the world wide. Given the use about principle of good of faith by security market law all over the world, the whole development history of security market is the development of gradual conquering market infective, whose core is institutionalization of good of faith. Legislation of security market originating in England, which's earliest legislation of security market, was shot through wish thoughts of regulation."Bubble Act"ended in failure, for strong thoughts of regulation and it suppressed the development of security market. England has set up the principle of good of faith in"Joint Stock Company Law in 1844". American legislation opposing security cheating is recognized to be the strictest, most comprehensive in the whole world. American security market was not early, but it was developing rapidly, and it has become the most advanced security market."Security Market Law"of American in 1933 implemented the principle of good of faith, which has been following based by many countries in the world and being of great significance in the world. American development of good of faith in security market gave lots of positive inspiration for other many countries: the advanced development of principle of good of faith corresponded with the development of market economic; American advanced development of principle of good of faith was the necessary result resting on the achievements of mankind's civilization; American religious power was the key cultural factor for the idea of good of faith. At present, in many countries such a Japan, Germany, Canada, and several international organizations, legislation of security market put the good of faith as the most important position. As can been seen from reviewing the development of principle of good of faith in security market law: restriction at a certain degree of contract freedom by law was the primary base for good faith principle that was evolution from setting up the disclosing obligation; law for the interest of the society but not for single person was the important condition for implementation of principle of good of faith in the community investors; strong but proper interference by the country was the basic factor for ultimate formation of good faith principle.Chapter 3 gave legal value analysis of the principle of good faith in security market. Since the principle of good faith in security market was established, it's controversial in theory. Why was principle of good faith established in security legislation? How about the sense of legitimacy for the principle of good faith in security market? It was necessary in theory and practices to research the theoretical root of the problem. This part stated the principle of good faith in security market law from three aspects which is efficiency, equity and order. Product of security had the character of virtual and uncertainty value, which decided that the information had the important meaning for security market. But asymmetry and incompleteness of information in reality detracted from the efficiency of security market, which expressed in the form of increasing the transaction costs, stimulating the ethic risk, encouraging the idleness of agent, and resulted in ineffectiveness of market, market artificially segmentation, opposite choice, and collapsing even disappearing of market. The regulation, whose fundamental spirit was principle of good faith, helped to overcome this phenomenon, and promoted the efficiency of security market. Implementation of principle of good faith could decrease communication risk between the dealers; reduce the transaction costs; be favorable validity of legal action, increasing the efficiency; and gain high social benefit. Principle of good faith in security market did as a stimulus to justice. Setting up the system of disclosing information, promoted equality of using right condition between investors and managers, and realized the equality of right; balanced the benefit conflict of parties; at the same time, principle of good faith in security market effectively guaranteed the investors's right of option, which was where the justice value of law. Order was always considered as one of the most important values of law. Order of security market boiled down to one order of trust. Implementation of principle of good faith could publicize relevant information timely and accurately, and eliminate the sense of mistrust about security market from virtual economic; increase transparent of security market, harden supervision; make sure the opportunity of equality for gaining information by investors, suppress the inequality of trade to the fullest possible extent, which was caused by mendacious statement, Confidential transaction, and control the market, result in promoting the sense of safety and trust by the public.Chapter 4 analyzed the reason for absence of principle of good faith in Chinese security market. From this chapter, we came back to the reality of Chinese security market, analyzed the reason of absence of principle of good faith in Chinese security market, and then as different sore must had different salve, researched the valid way in which principle of good faith was really applied in security market. From the historic cultural aspect, principle of good faith in Chinese traditional culture was different from that in security market which this article dealt with, even the meaning and idea contained in good faith from Chinese traditional culture just was the Shackle for the development of good faith in security market. Absence of shareholder in the public company, weakness of the system in corporate governance structure, low qualities of participant, weak awareness of regulation, dislocation of function of security market, low cheating cost constituted the economic society factor of the absence of good faith in Chinese stock market. The law without authority, strong governmental intervenes, flaws of the concrete negotiable securities law system contributed the legal policy factor of the absence of good faith in Chinese stock market.Chapter 5 discussed the way and the concrete system where the good faith principle was able to be implemented and to play the role in the stock market government by law practice. Summarization might induce two aspects, the macroscopic and the concrete. From the macroscopic aspect, must diligently realize the negotiable securities legislation, supervise and manage idea reforming, improve the capital market intrinsic quality and consummate the government structure; cultivate stock market governed by law ecological environment; deepen government moderate supervising and managing idea. From the concrete aspect, must further perfect each kind of concrete system arrangement which manifested the stock market good faith principle. Perfect information public system; Perfect legal liability system; Strengthen specially supervises mechanism; Appropriate display news media vital role; As well as consummates other related systems.The well-run mechanism is the combination of environment and rules, also namely the unification of software and the hardware aspects. The good faith principle plays an indispensable role in the security market. The intense approval of good faith principle by the security market and simultaneous supports by the concrete system consist the only way to realize the rule of law in the security market.