Study On Legal System Of CDR

The depository receipts,a cross-border investment and financing instrument,is widely used in the capital markets globally.China in 2018 made a formal activation for innovation enterprises to pilot the listing of CDR within the country in order to promote the development of capital market,as well as expand and deepen this market.Over the past 2 years,relevant authorities have issued or revised supporting legal documents and established a basic framework for CDR system rules according to our conditions,enriching the basic contents of the legal system of CDR.The opening and globalizing capital market have become an irreversible trend.The introduction of CDR indicates that our determination of advancing reform and development by openness is unshakable,and that the pace of the capital market independently opening outside will never be stopped.Under this circumstance,this paper stresses studying the legal system of CDR,with a comprehensive use of literature research and comparative research.Starting with the legal system and practice of CDR,it is focused on studying major provisions of such a receipt as well as legal relations between subjects involved and cross-border conversion mechanisms,so as to explore systems related to the ADR and learn to improve ours.At the same time,this thesis also discusses how to make an improvement of legal system of CDR,and puts forward suggestions accordingly.Though the basic framework of legal system of CDR has been precise,there are still deficiencies.On the one hand,individuals who issue the depository receipt have not been specific.The responsibility of issuers cannot be looked into.Moreover,the arrangement of qualified subjects of legal depositary institution is not appropriate,and CSDC and its subsidiaries are not suitable to serve as depositary institution.On the other hand,legal relations between subjects involved of CDR have not been cleared.In addition,the cross-border conversion mechanism in this regard is blank.In order to improve legal system of CDR,this paper comes up with corresponding proposals by exploring the ADR and learning from its merits.First,this paper suggests that the issuer of CDR should be specified,that the stipulations on the legal eligible subject of the depositary institution ought to be modified,and that CSDC and its subsidiaries should be wiped out from the legal eligible subject of the depositary institution.Second,this paper thinks that the legal relationship between the participants of the CDR is neither trust relationship nor principal-agent relationship or equity holding relationship.Essentially,the deposit agreement is an anonymous commercial contract of new kind;the relationship between the overseas issuer and the depositary institution is the entrustment relationship;the relationship between the depositary institution and the people holding of the CDR is the contract relationship;the relationship between the overseas issuer and the holder of the CDR is the relationship between the company and the investor;and the relationship between the depositary institution and the custodian is the relationship of entrustment agreement.In the end,this paper advises to open the cross-border conversion channel of CDR in the period of limit management and exchange restriction in response to the cross-border conversion mechanism and suggests to offer low-interest loans for overseas issuers based on the proportion or amount of funds raised by them retained in the country,thus easing the impacts of capital market reform on the securities market and management system of foreign exchange by encouraging overseas issuers to spend the raised funds in China.