Research On China Depository Receipts Investors' Legal Risk And Prevention

With the continuous improvement of China's economy's openness to the outside world,the internationalization process of the securities market is also accelerating.The requirements of China Depository Receipts are becoming more and more intense at home and abroad.China Depository Receipts has become an irreversible trend.On June 6,2018,China passed the "Administrative Measures on the Issuance and Transaction of China Depository Receipts(Trial)",and the China Depository Receipts was formally established.China Depository Receipts refer to securities issued by depository and issued in China on the basis of overseas securities,representing the interests of overseas basic securities.Depository receipts is based on the modern trust system.Our country's law stipulates that foreign enterprises can not directly issue stocks in China.China Depository Receipts circumvents this legal restriction and enables foreign enterprises to finance in China by issuing China Depository Receipts.With the help of China Depository Receipts,red chip company can back to the domestic market.This can promoting economic mobility,and promoting the integration of domestic market with the international market.China Depository Receipts are still in the initial stage,and only open for red chip company which meets the requirements.Since the establishment of China Depository Receipts,the CSRC,the SAC,China Banking and Insurance Regulatory Commission,the CSDC,Shanghai Stock Exchange and Shenzhen Stock Exchange all formulate and revision their measures in order to adapt China Depository Receipts.However,the prevention of the investors' legal risk of China Depository Receipts needs to be further improved.The difficulties for the legal risk prevention of China Depository Receipts investors including: the imperfect legal system of China Depository Receipts,the uncoordinated cross-border information disclosure,the market segmentation and arbitrage risk brought by Foreign Exchange Control,the unspecified extraterritorial jurisdiction,the liability for compensation is difficult to implement,and the protection agencies have not played a real role.Therefore,learn from American Depository Receipts,strengthen the depository receipts legislation,improve the legal system of depository receipts,expand the scope of information disclosure,strengthen supervision of domestic and overseas cooperation,establish a depository certificate supervision system for disclosure of information and joint supervision at home and abroad,gradually repeal Foreign Exchange Control and allow two-way free conversion of depository receipts and basic securities,speed up the construction of dispute resolution mechanism,clarify China's jurisdiction,improve judicial relief,and give full play to the protection functions of government agencies are effective ways to prevent the investors' legal risk of China Depository Receipts.The structure of this paper: First,briefly introduce the concept,basic legal structure and legal relationship of Depository Receipts.Second,analyze the legal risks of the China Depository Receipts from the legal system,information disclosure,market supervision,Foreign Exchange Control,jurisdiction,judicial relief and investor protection institutions.Thirdly,analyze the law of China Depository Receipts,and summarizes the shortcomings and analyze the reasons.The fourth is to introduce American Depository Receipts,and learning from it.At last,propose improvement measures in order to better improve the China Depository Receipts and prevent investors' legal risks.