A western point on law on joint stock companies are not well developed except in Asian countries with well developed legal systems (basically common law jurisdictions and Japan). But, historically, there was no shortage of different forms of domestic business associations, governed by custom and familial ties, under a concept of property very different to western concepts of private property.

Historical development in China. Capital markets did develop from mid 19th century until the late 1940s, but they constituted a minor part of commercial life. The legal development was weak – weak protection of private rights, and there was weak regulation. The previous legal regime was overturned in 1949. After 1949, no commercial law or law of business associations until mid 1980’s, and private property was not constitutionally recognized until 1989 and private economy until 2004.

Mr. Neoh showed several samples of overseas companies shares sold in China back then, and also samples of banks selling shares during old time. There were some domestic companies created from 1872-1883. For example, “开平轮船局” and “轮船招商局”, which was incorporated in Hong Kong. As far as company share is concerned, Mr. Neoh mentioned one example, “抚顺煤矿总公司” in 1901. Like other companies at the time, this company did not pay dividends. One of the reasons they did that was because they did not know where the profits were, given many of its subunits scattered across the countries, such that collecting information was very difficulty. What they did was to promise the shareholders certain percentage of their investment, and paid them yearly.

There were stock exchanges. For example, one was created in Beijing, 1918, and in Shanghai 1921. The common feature was no accounting standard was used at the time. Mr. Neoh also showed some examples of shares and bonds of companies of the time. No accounting standard was adopted then, but instead, they got dividends proportion to the investments.

After 1949, there was no private economy in China. The state planned economy did not recognize private property. China in early 21st century started to change, such as adoption of OECD corporate governance code.

The challenges ahead include 1) market value of managerial class, 2) working out the boundaries between managers, shareholders and others, 3) managers, directors and supervisors define their roles, and 4) development of legal systems.