On The Legal Issues Of Financial Holding Companies

The system of financial holding company established by Gramm-Leach-Bliley Financial Modernization Act in U.S.A. is the organizational innovation of financial mixed-operation. Many developed countries, such as Japan and Canada, and a lot of developing countries have adopt the system of financial holding company to implement mixed-operation one after another , the system of financial holding company has become the main organizational system of financial mixed-operation in the world.Under WTO system, in order to tackle the reality of fierce international competition, China must give up the financial separated-operation legal system to implement financial mixed-operation system, and foster and develop the financial holding companies and set up Chinese financial "aircraft carriers". Though there are a large number of financial holding companies and "quasi" financial holding companies in China, but the laws and regulations of our country do not have corresponding regulation to them at present, it produces a lot of legal questions. It is the urgent demand for financial practice in China to carry on further investigation on legal problems of the financial holding company and put forward the corresponding legal measures.The thread of this thesis is probing into the legal issues of preventing the legal risk of financial holding companies. This article studies the main legal issues of the financial holding company, but not attending to study each and every aspect of the financial holding company. Adopting comparative method of research mainly, this thesis studies relevant legal systems of financial holding company in U.S.A., Japan and Britain, and puts forward the corresponding legal proposals to the relevant legal questions of the financial holding company in China, on the basis of the studies on these relevant legal systems.The thesis is composed of six chapters, the main content is as follows:Chapter One studies the basic legal issues of the financial holding company.Section one analyses the concept of the holding companies, the meaning of controlling and the kinds of holding companies at first, then analyses the concept , types and legal characteristics of the financial holding companies, and makes comparative analysis to relevant concepts . Section two probes mainly into the concrete development course and reasons of financial holding companies of U.S.A., and introduces the development of financial holding companies in Britain, Japan, S. Korea and Taiwan. Section three analyses the special legal questions that the financial holding company produces.Chapter two explores the organizational system of the financial holding company. Section one focuses on the development of theories about financial mixed-operation. It analyses the concept of separated-operation and mixed operation at first, then analyses the development of theories about financial mixed-operation, and probes into the reason of financial mixed operation finally. Section two compares the relevant organizational systems of mixed operation. It analyses the advantages and disadvantages of Britain "financial mixture" system and Germany universal banking system, and compares three organizational systems of mixed-operation to draw enlightenments finally, Section three carries on the legal economics analysis to the system of financial holding company.Chapter three deals with the legal issues of financial "fire wall". Section one analyses the concept and types of the financial fire wall, and probes into the reasons that the financial fire wall exists. Section two comparatively analyses the development and characteristics of the legal systems of financial fire wall in U.S.A. and Japan. Section three comparatively analyses the "Chinese wall" in British and U.S.A., and compares the "Chinese wall" with the "fire wall" . Section four analyses the concrete problems that the system of fire walls produce and point out the limitation of the system of fire wall. Section five puts forward some measures to perfect the system of fire wall.Chapter four focuses on the enhanced obligations of financial holding companies in U.S.A.. It introduces forms and relevant theories of the enhanced obligation in U.S.A., and makes historical and empirical studies on the enhanced obligation, andfinds out some problems of the enhanced obligation and puts forward settlement measures, and compares the enhanced obligation with the system of piercing the veil of cooperation, and probes into the reasons why the enhanced obligation exists, and studies the value of the enhanced obligation finally.Chapter five draws a comparison with the legal systems of regulation of the financial holding company. Section one analyses the legal meaning of the financial regulatory system. Section two compares the basic regulation modes, it analyses the advantages and disadvantages of the entity regulation, the objective regulation and the functional regulation. Section three analyses the main multilateral regulation modes, such as Umbrella Supervision in U.S.A, twin peaks regulation in Australia and lead regulation in Brazil. Section four compares the mode of multilateral regulation with the mega regulation. It concludes that there are pros and cons in various kinds of supervision modes and the key factor for choosing the best regulation system is the concrete conditions of various countries.These five chapters focuses mainly on the comparatively studies on the foreign legal systems of financial holding companies, its purpose is to seek the reference from the legal experiences in typical foreign countries.Chapter six explores the legal issues of the financial holding companies in China and proposes corresponding legal system designs. Section one makes empirical studies on the financial holding companies in China, and probe into their forming reasons, legal characteristics and legal questions existing. Section two reviews the forming and development of the financial system of separated-operation in our country, and probe into the necessity that the legal system in finance should be reformed in our country under WTO system, and analyses the laws and regulations taking place at present toward mixed-operation. Section three proposes mainly the legal countermeasure to the questions of the financial holding companies in China. Drawing lessons from the relevant legal systems of the foreign financial holding companies, combining the actual conditions of society, economy and law in China, it puts forward designs for the relevant legal systems of the financial holding company in China. First, legal status of the financial holding company. Second, organizationalform. Third, business scopes. Fourth, financial "fire walls". Fifth, the enhanced obligations. Sixth, regulatory systems.