The extra-territorial application of corporate governance standards in China

Abstract

In this article, we describe theoretical application of extra-territoriality to corporate governance related law in Hong Kong. We describe why and how such extra-territoriality (following the lead of the United States) could encourage Mainland firms to adopt corporate governance practices more in line with the OECD Guidelines (and even implement them). Changes to the Companies Ordinance and the Hong Kong Stock Exchange’s Listing Rules can, in theory, provide for such extra-territorial reach. The results of such an experiment would help us understand the role an international financial centre can play in creating value across borders, as well as make Hong Kong’s rules and markets more relevant in/to Mainland China.