Cross-border Equity Transfer Law Applies

Cross-border Equity Transfer refers to international economic activities between or among two or more than two parties with different nationalities. Its essence and impact on economic development differs from domestic equity transfer some way. Cross-border Equity Transfer contains three foreign factors during the equity transfers: the first one is subject with foreign characteristic, i.e. one of the parties is foreigner; the second one is equity with foreign characteristic; the third one is conduct with foreign characteristic. As Cross-border Equity Transfer is limit to ownership transfer of corporation share and will not lead to interruption of corporation's normal operation, meanwhile, Equity Transfer facilitates assignee to access to the corporation with low cost, big efficiency and high speed, so Cross-border Equity Transfer keeps close pace with the development of Cross-border M&A and securities transactions. Cross-border Equity Transfer is adjusted by Contract Law, Company Law and Securities Law etc., which diversifies across different countries. There are many types of disputed occurring during the process of Equity Transfer and the stipulations of choice-of-law are not always the same one, so judicial institutions have to face conflict of laws when dealing with such disputes. This thesis mainly focuses on following aspects with regard to the application of law about Cross-border Equity Transfer, striving to give a wholesome answer to respected questions from the perspective of theories and demonstration.Firstly, as Cross-border Equity Transfer is based on domestic Equity Transfer, it is necessary to master the basic concept and nature of the equity. Compared to domestic equity transfer, Cross-boarder Equity Transfer has its own intrinsic characteristics,which reflects as its cross-boarder transaction, the complex of its application of laws and the forms of Cross-boarder Equity Transfer. To fully understand the issues involved in the Cross-boarder Equity Transfer, we need to look into legal sources of Cross-boarder Equity Transfer, including contract law, company securities law and investment law, etc.Secondly, the generally applicable principles in private international law for solving the law conflict problems could also, but not wholly, be used to handle the problems caused by Cross-border Equity Transfer. But the conflict of laws arising from cross-border Equity Transfer has its own feature even in the event of applying the same principles. Unilateral choice of law rules instead of bilateral ones are more frequently used. Freedom of Contract developed from solving the conflicts in contract cases. Under many circumstances, Cross-boarder Equity Transfers are conducted through contractual arrangements, therefore the principle of Party Autonomy to Contract is also one of the important principles solving the application of law issues for Cross-boarder Equity Transfers. Because the parties to a specific Cross-boarder Equity Transfer are often located/resided in different countries and Cross-boarder Equity Transfers will often involve more than one countries, the principle of Most Significant Relationship is still used for solves disputes arising from Cross-boarder Equity Transfers. Also because Cross-boarder Equity Transfer often leads to the transfer of controlling of the target company, most countries will impose restrictions on Cross-boarder Equity Transfers, leading to the compulsory application of relevant legal provisions in Cross-boarder Equity Transfers.Thirdly, before settling the dispute of Cross-border Equity Transfer, the jurisdiction of Cross-border Equity Transfer should be decided. The traditional principle for solving the conflict of jurisdiction could also be applied to Cross-border Equity Transfer, but the related function is different, e.g. Also in jurisdictional practice, the courts from different countries hold different views and attitudes toward the jurisdiction determination for Cross-boarder Equity Transfers disputes. Through the comparative analysis on the disputes resolution arising from Cross-boarder Equity Transfers in English legal system, we noticed that such jurisdiction are in a trend expanding their domestic jurisdiction form their legislation and adjudication. Specifically the United States of America expand its jurisdiction over disputes arising from Cross-boarder Equity Transfers on he basis of the anti-fraud under securities regulations and the influences on America as the result of the Cross-boarder Equity Transfers. Therefore, for the resolution of disputes arising from Cross-boarder Equity Transfers, we should borrow the principle "Forum non Conveniens" in international private law, in order to avoid multi-litigants and the "forum shopping" of the parties.Fouthly,Cross-boarder Equity Transfer will result in two legal effects: the first is the same intention between the assignor and the assignee, i.e., they agree to equity transfer between them; the second is the actual legal transfer coming into being,, namely the assignee is entitled to become the company's new shareholder and to be recorded in the shareholders' book and Articles of Association, in the place of assignor. The first legal effect is often adjusted in accordance with the regulations of contract law, but how to confirm the next legal effect is always complex. Fifthly, Cross-boarder Equity Transfer is Delivery options between assignor and the assignee, furthermore, there are many legal problem in accordance with the Company Law, for example, it isn't Inevitable to registrate the equity transfer while actual transfer is done, and which law will be adopted to confirm the legal effect of the Cross-boarder Equity Transfer, the law of the place where Share certificates were be delivered, or law of the location of the target company?Sixthly, In Cross-boarder Equity Transfers, foreign investors may influence even control the target enterprises. When the control on the enterprises reach certain scale, the controlling effect will often lead to the control of the country of such companies -control of the "domestic" country by foreign investor's parent country and multinational companies. So Cross-boarder Equity Transfer on maybe spur the development of the domestic country, meanwhile some negnect effect will also arise from the foreign control of the domestic company, the most serious is affecting the national security of the domestic country. As a result, many countries have promulgated laws to restrict and regulate Cross-boarder Equity Transfers, meanwhile interests of the minority shareholders in the Cross-boarder Equity Transfers will be damaged. Therefore, anothor problem should be considered: how to protect the interests of minority shareholders in the Cross-boarder Equity Transfer transactions ?Seventhly, How to apply law to indirect holding of Cross-boarder Equity Transfers? The principle of the law of the place of the property in the traditional direct holding regime has ceased to function to solve the conflict of laws in today's actual business. Therefore the newly appeared theory of the location of securities intermediary plays an important rule for confirming the jurisdiction for such disputes. The law about indirect holder of Equity Transfers in China is briefly analysed and some suggestions are also made in this paper.