Vanderbilt Journal of Transnational Law


Mark S. Massel

First Page



Securities regulation -- domestic and foreign -- has a technical fascination for the lawyer, whether he be a practicing attorney, corporate counsel, government regulator, or legal scholar. The intricate detail of the primary regulations and of their subsidiary byways provide opportunities for stimulating mental gymnastics. The piecing together of the various phases provides interesting occasions for experimentation, speculation, and analyzation.

Yet, a preoccupation with securities regulation which overlooks the setting can produce mere academic exercise. The need for an appreciation of the setting is all-important in examining foreign securities regulation. In considering United States securities regulation we do not need to devote any considerable time to forms of business operation, to the investment climate, or to other types of government regulation -- though our analysis suffers if we ignore these factors. As lawyers, or businessmen, we are so accustomed to these factors, and to the existing operations of the pertinent business entity, that we can take much for granted.

However, foreign operations present a different story. In establishing a new entity in another country, or in expanding an existing one, we must consider a range of problems which face a newcomer or an older guest in a host country. Many of these facets must be considered before grappling with the intricacies of securities regulation. Indeed, such consideration may actually point the way to avoid securities regulation entirely, while others affect the objectives inherent in issuing the securities in question.

It would be useful to have at hand a hornbook which catalogues and check-lists all of the problems inherent in foreign operations. However, the construction of such a horn-book would be an exercise in futility. The variety of operating conditions of the industry, the company, and the individual host countries is too great for a full description.

What I propose to do here is to provide a rough, impressionistic view of the contours of the underlying business-legal issues which come up, before one faces the problems of securities regulation. We shall consider, in order, the form of the venture, the investment climate, the financing institutions, corporate law, tax structure, other forms of government regulation, and patents and trademarks. Then, we shall turn to the influences of United States antitrust law -- an increasingly important element -- and our exchange controls. Finally, we shall briefly consider differences in the economic development of the host countries.