Research On Leagal Regulation Of Sovereign Wealth Fund

Sovereign Wealth Fund (SWF) is a kind of investment assets owned and managed by the government of sovereign country. SWF has multiple objectives, including stabilizing domestic economy against volatile commodity prices, saving wealth for descendents, pursuing high investment returns, and realizing political and strategic interests etc. Sovereign Wealth Fund currently manages 3.4 trillion in 2008 and are expected to grow to over $12 trillion by 2015,twice as that of hedge funds. SWF has become a major force in global financial market. It poses challenges to current international economic and financial structure from both theory and practice.Since SWF pursues long term investment, it has positive effects on stabilizing financial market and promoting economic development. At the same time, because of such factors as its government background and its not-very-clear operation etc., SWF causes suspicion of the investment receiving countries. They doubt that SWF not only pursues commercial objective but also has political purpose. Many countries also worry that SWF might be used to support the so-called“state capitalism”and control strategic sectors. So they strongly demand that SWF be strictly supervised.At present, the study of SWF is mainly focused on economic and financial methods, including such problems concerning SWF as taxation problem, corporate governance, effects on state security and financial market, and investment strategy etc. This dissertation studies SWF from multiple perspectives but focuses on the legal regulation of SWF from the perspective of law. The structure of this dissertation is as follows:Chapter one provides legal explanation of SWF. This chapter, through the comparison of SWF with relevant concepts like foreign currency reserves and pension funds, analysis of the concept, origin and development, characteristics and important effects of SWF and provides legal explanation of SWF. The above analysis provides a premise for the legal regulation of SWF. SWF is quite different from traditional fund in the aspects of holders structure, sources of capital, objective of investment etc. It has both public and private law factors and involves multiple legal relations. Thus, the regulation of SWF demands special legal rules and principles.Chapter two discusses the legislation on SWF. The legislative regulation on SWF is the common demand of investment receiving countries and international organizations. This chapter, based on the legislative practice of SWF, conducts a comparative study on the legislation of international organizations and major countries and makes suggestions on how to perfect legislation based on the comparison and review of the above legislative practices.Chapter three reviews relevant theories and modes of corporate governance and studies the characteristics of the governance of SWF by making comparisons between corporate governance theory and the characteristics of SWF. SWF is not suitable for shareholder governance mode because of its special governance structure; neither is SWF fit for creditor governance mode since it does not have clear debts. So we must perfect the governance of SWF from its risk management, investment objective and the bargaining among its stakeholders. This chapter also discusses the investment strategy, investment objective, risk and risk control of SWF.Chapter four discusses the information disclosure of SWF. The transparency of SWF is a major problem subject to international dispute. Some countries justify their imposing strict restrictions on SWF by stating that since they cannot obtain exact information of SWF they believe it has political and strategic purpose. Since SWF is a special institutional investor,when we regulate its transparency we should fully consider the relation between its business confidence and transparency and reasonably define the contents and scope of its transparency and information disclosure in order to make equitable and reasonable disclosure rules and procedure.Chapter five discusses the legal responsibility and dispute resolution of SWF. This chapter discusses the relevant legal responsibilities of SWF and the consideration of its legislation and focuses the disputes resolution methods and system of SWF. The disputes resolution system of SWF is the most complicated and imperative problem to be solved by international society. This dissertation discusses the applicability of the existing disputes resolution system to the disputes resolution methods and system of SWF as well as the possibility of establishing a special disputes resolution system for the disputes resolution methods and system of SWF.