On The Extraterritoriality Frontier Of Chinese Securities Law

Under the background of promoting domestic rule of law and foreign-related rule of law,the "extraterritorial effect clause" added in the revision of the Securities Law in2019 puts forward the extraterritorial effect of the Securities Law,which should have frontier.The frontier between the acts that can be governed and those that cannot be governed is defined as "rules frontier",which is delimited by positive rules of domestic law and restrictive rules of international law.The Securities Law has extraterritorial effect in the range that it is not forbidden by international law and has rules basis in domestic law.The frontier between the acts that should be governed and those that should not be governed is defined as "activities frontier",which should be exercised actively and which should be abandoned voluntarily,considering the characteristics of the acts regulated by the Securities Law and the costs and benefits of exercising jurisdiction abroad.In the first chapter of this paper,several legal concepts about extraterritorial effect are analyzed.Compared with the concept of extraterritorial application and extraterritorial jurisdiction,the concept of extraterritorial effect includes both public law and private law,and it also includes legislation,enforcement and judicature.At the same time,we should distinguish between extraterritorial effect of public law,extraterritorial effect of private law,substantive law and procedural law.In the second chapter,I use the method of legaldogmatics to explain the concept and system of the "extraterritorial effect clause".In terms of the purpose of regulation,the " extraterritorial effect clause " has three purposes: opening up the capital market,maintaining the domestic market order and protecting the rights of domestic investors;in terms of the scope of applicability,the formal standards for determining whether an act fulfils the scope of application of this article include whether the act occurs outside the territory of China and whether the act falls within the issuance and trading activities defined in the Securities Law;the substantive standards include whether the act disrupts the market order and harms the rights of investors,which are similar to those in the US securities law but with some differences;in terms of legal liability,the " extraterritorial effect clause " is still limited and general,and the expressions of "handling in accordance with the relevant provisions of this law" and "pursuing legal liability" still need to be further clarified.The third chapter analyzes the extraterritorial effect of the Securities Law in the modern international law system.First of all,it is clear that there is no rules about the extraterritorial effect of domestic law in positive international law.In the field of public law,“Lotus Principle” only can be applied in sovereign state governing its domestic affairs and diplomacy,but the extraterritorial effect of domestic private law is a universal principle of international law.Therefore,the principles of sovereignty,noninterference in domestic affairs and equality and mutual benefit are used to fill the loopholes of the regulation of the extraterritorial effect of domestic law.In addition,the extraterritorial effect needs extraterritorial jurisdiction,and the practice of conflict and coordination of extraterritorial jurisdiction can delimit the de facto scope of the extraterritorial effect of domestic law.In combination with Chapters II and III,the frontier of the extraterritorial effect of the Securities Law is that the securities regulatory authorities exercise administrative jurisdiction over the "Chinese" who issue and trade securities outside the territory of China,and the Chinese courts accept foreign-related civil tort actions brought by investors and make a judgment based on the Securities Law of China and enforce the effective judgment based on the reference for Conflict Rules.From the perspective of efficiency in cases,Chapter IV of this article divides extraterritorial jurisdiction into protective jurisdiction and cooperative jurisdiction based on the main purpose of exercising jurisdiction,asserts that taking proactive extraterritorial jurisdiction for acts that are illegal in overseas transactions in the Chinese market and that harm the interests of investors,and acts that are illegal in issuance and trading of depository receipts and that harm the interests of investors;however,when it is more convenient for overseas competent authorities to enforce over acts such as overseas issuance and listing of Chinese companies and overseas transactions of Chinese investors,China shall seek enforce cooperation and enforcement jurisdiction modestly.Finally,the conclusion of the fifth chapter is that the extraterritorial effect of Securities Law has rules frontier and activities frontier,but the frontier is not fixed.In the process of realizing the extraterritorial effect,the rules frontier may advance or retreat with the further legislation and the confirmation of international law,and the activities frontier may be controlled in the process of extraterritorial law enforcement and extraterritorial justice.