Legal Construction On Governance Structure Of Chinese SWFs

In recent years,Sovereign Wealth Funds(SWFs)have been recognized as a mature institutional investors,and an important participant in the international monetary and financial system.It features own of the sovereign government,comes from a country's foreign exchange reserves and fiscal surpluses,mainly for foreign investment.In the process of SWFs further develop and expand the investment,the establishment and improvement of a scientific and efficient the corporate governance structure is the needs for SWFs to develop,but also the universal voice of the international community that the "Santiago Principles" as the representative.The essence of the problem is to solve the problem of the operating agency costs between shareholders and management.Governance of Chinese SWFs to choose from the three modes:Trust governance model,the corporate governance model and public law governance model.In these three governance model,only manufactured is the best choice to Chinese SWFs governance model.CIC is only one SWF.Probably we will create other SWFs.So the legislation on SWFs is necessary for regulation to the governance.Regulation on corporate governance,we should study the experience of successful SWFs as the Temasek.We will proceed from the three aspects:the government as the shareholder how to exercise the right,the settings of the board of directors and senior management and oversight mechanisms.SWF has its own particularity.By one hand,it has public property,reflected in its sovereignty and national funding sources;on the other hand it has private property,the performance is the the business feature of investment objectives and private subjectivity of most of the SWFs.Two features blend in one but not mutually conflict.External investment environment,the East-West structural imbalances and state capitalism abnormal increase in the proportion of its investment environment.This feature leads to the governance structure of the SWFs also has multi-dimensional.Corresponding law is multi-dimensional,including two dimensions,public and private,international and domestic.SWFs corporate governance issue is based on SWFs own particularity.SWFs are state-owned enterprises.The government faced with the conflict of roles as shareholders and managers at the same time.Achieve the separation of the two rights is an-effective way to coordinate the role of government.Meanwhile,in order to achieve the purpose of the protection of state-owned assets,we should make government shareholders maximize exercise shareholders' right.Among them,the derivative lawsuit is an effective way for the Government to protect their own rights and interests.On the basis of compare foreign legislative experience,we foudd the direction of the legal regulation of Chinese SWF-to build a firewall system.The general characteristics of the Board are:independence,professionalism and accountability.Therefore,the set of Board of Directors of SWFs should also pay attention to the problems including:the independence of the "degree",the balance between inside directors and outside directors and exert directors' enthusiasm mostly.The third point includes positive incentives and negative accountability.Incentives related to the set up of remuneration and the application of the business judgment rule.SFWs experience shows that the independence of the board of directors,staff and incentives designed to set is the tips for operation management of the SWFs.CIC faced problems that staff composition with a strong official sense,incentives is not scientific and legal authority of the Board is not clear.There is coexistence of Board of Supervisors and independent directors in SWFs.The two due to different legislative philosophy,so conflict exists.But the supervision focuses different,so they can complement.Combined with the concept of foreign legislation,we can consider the introduction of externl oversight,for formation certain condition and balances on the basis of both coordinated and complementary.On the basis of system combing about the corporate governance of SWFs,integrate the recommendations for improvement of the issues involved into legislation,for the formation of an initial legislative framework on SWFs corporate governance,hoping to be beneficial for specific legislation on SWFs in the future.