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Another
Trip Back We made a teaching and research trip to Renming University of China ("Ren Da") in November. This was the third scheduled teaching and research trip under a joint program initiated by the Overseas Young Chinese Forum ("OYCF") and the China Civil and Commercial Law Research Center ("CCCLRC") at Ren Da Law School. The program is funded by the U.S.-China Legal Cooperation Fund and the East Asian Legal Studies Program at Harvard Law School. Prior to this trip, Bo Li, the project leader from OYCF, made the first trip in November of 2000, and Tingting Shi of OYCF made the second trip in June of 2001. Before the trip, we spent a significant amount of time developing the course and selecting teaching materials. In late October, we finalized a course syllabus covering important subjects in American corporate law, with an emphasis on corporate governance and corporate finance. On November 1, we left New York and San Francisco, respectively, for Beijing, arriving on the afternoon of November 2, 2001. We received a warm welcome from our student coordinator for the course, Ms. Yang Xu, at Beijing airport. As soon as we arrived at Ren Da, we started working on getting ready for the classes by first sorting out the teaching materials for Yang Xu to make copies for students. We heard the good news from Yang Xu that the course was a hit and was subscribed by over eighty graduate students. Due to limitations on the size of class, we were only able to offer the class to approximately fifty graduate students at Ren Da Law School. Also, the class was a 1-unit credit class formally listed in Ren Da Law School's curriculum. In addition to class participation, each student must also write a paper to earn the class credit. I. The Course The title of our class was American corporate law - selected topics in corporate governance and corporate finance. We organized the course into ten sessions on (i) concept and formation of corporation, (ii) structure of corporate governance and shareholder voting rights, (iii) corporate governance and fiduciary duties of directors and officers, (iv) capital structure and issuance of capital stock, (v) limited liability and protection of creditors, (vi) venture capital financing, (vii) IPO process, (viii) federal securities laws and corporate governance, (ix) fiduciary duties in the context of corporate takeover, and (x) mergers and acquisitions. Bo taught four sessions, Junling taught five sessions, and we invited a guest speaker, Zhao Qian, to teach the class on the IPO process. The total length of the class was twenty-five hours. Considering the short term and intensity of our course (ten sessions in two and half weeks) and the students' English proficiency level, we selected teaching materials mostly from an easy-to-understand course book, Soloman & Palmiter's Corporations: Examples and Explanations (Aspen, 1999), supplemented by important cases, statutes (Delaware corporate statutes, the Model Business Corporation Code and selected federal securities laws), and other teaching materials. The combination of different types of teaching materials were intended to provide students with accurate source of black letter law as well as real life cases, explanations and analytical tools. To earn the class credit, students were required to write a short paper on a topic covered by or related to the class. In the course syllabus, we suggested to students a number of potential paper topics. In addition, to incentivize students, we announced that we would publish selected papers on the Chinese edition of Perspectives. Our course had two major themes, which were corporate governance and corporate finance. Currently, corporate governance is a popular topic in academic, business and policy discussions in China. The reason, unsurprisingly, is that corporate governance is closely related to the ongoing reform of state-owned enterprises and the development of stock market. In our class, we focused on the fundamentals of corporate governance in American corporation law, and discussed theories, black letter laws, important cases as well as practical implications of law. We also stimulated heated discussions on differences between the American practice and the current system in China, and explored possible ways to improving corporate governance in China. In his classes, Bo spent a considerable amount of time discussing the concept of corporation, the implication of having a separate legal entity, the nature of limited liability, the economic foundations of the modern corporate system, the principal-agent problem, and the evolution of corporate governance structure. In one of her classes, Junling explained in detail the concept of fiduciary duty in American corporation law and compared different structures of corporate governance in the United States and China. These topics triggered heated discussions among students, and we led students to explore the proper roles of corporate board and its directors, the rights of shareholders, and the balance between directors' responsibilities and the reasonable protection of directors. Another focus of our class was corporate finance, and in this respect we explored various financial rights of corporate participants and principal ways for a corporation to raise funds, which include public offering, private financing, debt as well as mergers and acquisitions. We also taught related American securities law. For example, the American securities law registration requirements and exemptions were taught in the context of a corporation's need to sell shares of its capital stock. We noted the differences between American and Chinese systems in their functional division between corporation law and securities law. In the Chinese system, the form of a corporation (a share holding company or a limited liability company) determines whether the corporation can sell its securities in a registered offering, whereas in the American system, the issuance and distribution of securities, regardless of the form of the issuer, is the domain of securities law. In addition to teaching black letter laws and cases, we also tried to give students an introduction to practicing corporate and securities laws in the United States. For example, Junling walked the students through a venture capital financing term sheet and also a corporate acquisition term sheet to show how some typical corporate deals are actually structured and done. Another characteristic of our class is that, wherever relevant, we would spend time discussing theories, policy considerations and analytical tools, be they general legal concepts or some relevant economic analyses. Students particularly liked this aspect of the class. Bo, for example, took advantages of his advanced training in economics and provided valuable insights from the economic analysis of law. Economic analysis of such issues as the agency problem, the problems of collective action and information asymmetry, and the problem of transaction costs showed students a new way of approaching and analyzing legal issues. For another example, throughout the class, we tried to highlight the application in corporate law of such basic American legal principles as the "reasonable person" standard, the "prudent person" standard and the general principles of equity. II. Interaction with Students We had approximately fifty students in our class. Following American law professors, we used the Socratic (question and answer) method of teaching. We grouped the students into nine panels. Each panel consisted of five or six students and was responsible for one class session. Responsible panel students were expected to read the class materials more carefully and to participate actively in class discussion. We found that panel students were generally well prepared and ready to be called upon. Each class session ran two and half hours (from 9:00am to 11:30am). After each class, we would have lunch with the panelists of the day. Lunch was usually a good time to follow up on class discussion. At these lunches we also talked about student life in general and career choices after school. As expected, students showed a high interest in studying and working abroad. We shared with students our experience, first as students and then as practicing attorneys, in the U.S. In addition to teaching American corporate law, we also tried to expand our students' horizon and offer some comparative perspective by introducing several Chinese attorneys to the class. We invited a guest speaker, Zhao Qian, an experienced American as well as Chinese attorney who is currently with Skadden Arps Slate Meagher Flom in Beijing, to come to teach a session on IPO. In Qian's class, students were not only taught the mechanics of Section 5 of the U.S. Securities Act of 1933, they also learnt how a Chinese company can become listed on the New York Stock Exchange and what attorneys do in such an offering and listing process. After the class, Qian stayed to have lunch with students and gave students more time to ask questions. During conversations with students, we found that most students in our class do not list practicing law as their top career choices. Students usually regard jobs in the government, in a securities firm and in other financial institutions as more desirable career choices. Practicing law, according to most students, is a difficult job in China and usually does not bring high income. For the small number of elite law firms that do pay handsome salaries, they only have a very limited number of openings every year and it is very difficult to get in. In addition, a number of female students pointed out that women get fewer opportunities, and face more challenges, to become practicing attorneys in China. To encourage students, including female students, to become practicing attorneys, we invited Cui Lixin, a female partner from Junhe Law Offices, to come to speak to students. Junhe is one of the premier law firms in China. In her presentation, Lixin shared with students valuable insights on practicing corporate law in China and also offered advice on how to prepare for a career in a large Chinese law firm. The presentation was well received. After the presentation, Lixin attended a class-wide lunch with all students. In addition to having lunches with students and answering questions before and after class, we also held two office-hour Q&A sessions. Each office-hour session lasted two hours, and we saw a good number of students at each. Overall, we were pleased with the level of student participation and encouraged by positive feedbacks from students. III. Other Activities In addition to our teaching at Ren Da Law School, we also gave lectures at several other institutions, met a number of professors, professionals and friends, and explored opportunities for OYCF and its members to contribute to China's reform and opening process. The trip was extremely productive in this regard. At Ren Da, we received warm welcome from Professor Wang Liming, Director of CCCLRC and our main contact at Ren Da Law School. Professor Du Houwen, former Vice President of Ren Da, and Professor Zeng Xianyi, Dean of Ren Da Law School, also held meetings with us. We had some productive exchanges on future cooperation between Ren Da and OYCF. Like last year, Bo gave a lecture on his studying and working experience in the U.S. to freshman students at the Department of International Economics in Ren Da. After finishing his teaching at Ren Da, Bo made a trip to Shenzhen and Shanghai. In Shenzhen, Bo was invited by the Shenzhen Stock Exchange to give a lecture on American securities law and corporate governance. In Shanghai, Bo made a presentation on his view of law and constitutionalism at a Youth Tea Party organized by a group of young students and professionals. This young group is working with a local community in Shanghai to provide free legal aid and counseling service to residents with limited means. Junling was invited by her alma mater, Foreign Affairs College, to give two lectures. One lecture was on venture capital financing, while the other was on mergers and acquisitions. Junling's lectures were well received by students at Foreign Affairs College, and the school showed great interest in future OYCF teaching programs. During our stay in China, we also met many old friends and colleagues, including Professors Wu Jinglian and Wang Yuanhua. We also paid a visit to China Securities Regulatory Commission and a couple of other government agencies, and we exchanged views with friends there. In addition to teaching, we tried to acquaint ourselves with new developments in China, exchanged views with our friends and colleagues, and explored strategic relationships for OYCF. We enjoyed the hospitality of our friends, shared their stories, and appreciated their efforts in improving their own lives and the lives of many other Chinese people. We want to use this opportunity to thank those institutions and individuals who made our trip possible. Sincere thanks are due to the China Civil and Commercial Law Research Center at Ren Da Law School, the U.S.-China Legal Cooperation Fund, and the East Asian Legal Studies Program at Harvard Law School. We especially want to thank Professor Wang Liming, Professor William Alford, Cheng Xiao, Yang Xu, Zhao Qian, Cui Lixin, Zhao Qin, Ji Chunyan and Ma Wanli, whose advice, support and help were indispensable in making our trip a success. IV. Epilogue Another trip back, and it was a gratifying and rewarding experience. We taught and also learnt a good deal from our students and friends in China. We are working on expanding the OYCF teaching and research program, and hopefully more and more OYCF members can go back to China to teach or conduct research in the future. (Bo LI is an attorney with Davis Polk & Wardwell in New York and Junling MA is an attorney with Wilson Sonsini Goodrich & Rosati in Palo Alto, California.) |