Legislative Perfection On The Foreign Investors Entrance To China’s Security Market Under The Dual Identities

Foreign investors’ entrance to the China’s security market under the dualidentities formed in the gradual progress of opening up of China’s security market. Itrefers to foreign investors acquire A shares of the listed companies both by means ofmedium and long-term strategic mergers and acquisitions investment (hereinafterreferred to as strategic investment), and via the Qualified Foreign InstitutionalInvestors (hereinafter referred to as QFII) status or take financial investments throughQFII in the China’s securities market. Due to historical reasons, China administratesthe dual identity of foreign investors in the security market separately by regulationson mergers and acquisitions, and regulations on QFII. However, as both identities areforeign investors in capital nature, and can be ultimately controlled by the samesubject, the splitting legal regulation can not meet the flexibility capital, resulting inregulatory loopholes and legal risks. The current studis are full in each field, butdificient on the junction. So this paper tries to make deep and systematic researchfrom this perspective, and finally propose specific legislative perfection.Firstly, defin the concept of foreign investors’ entrance to China’s securitymarket under the dual identities, and analysis the cause of foreign investors’ dualidentities while entering china’s security market, which mainly are the particularcourse of the opening up of China’s security market, and separate operation-separatesupervision mode.Secondly, this paper analyses the current legal provisions on M&A of listedcompanies in China by the foreign strategic investment, as well as the current legalprovision on the QFII, through the point of the relation between the dual identities ofthe foreign investors. In addition, this paper analyses the followed troubles within thelegislation which based on the dual identities. China’s lack of provisions relevantM&A makes the fuzzy relationship of various investment entities; there is somebridging vulnerability between the institutions of M&A from foreign investors and theQFII; and the contradictions between the division of the legal system and the unity ofcapital control of foreign investors. The analysis of the legislative situation andtroubles exited will lay a good foundation for the analysis on the perfection of currentlegislation. The last part of the article, for the screening analysis of risks and legal loopholesmade in the first and second parts, propose systematic and concrete recommendationsfor legislative perfection。The general idea on the legislative perfection is includingthe followed aspects: the strategy on the opening of China’s capital market; theadvantage that China’s regulatory approach will meet; the legal hierarchy uniformityof the regulatory law; and the articulation issue between the institutions on the QFIIand the strategic M&A of the foreign investors. Based on the general idea above-mentioned, this paper provides five concrete recommendations for legislativeperfection through the aspect which is independent and interrelated.