Abstract
A complex business environment calls for a flexible administrative law for the agencies that oversee corporations. Nowhere illustrates this maxim better than Hong Kong, and its need to reform corporate regulations after the Panama Papers revelations. We describe how only a “non-administrative” administrative law can best cope with the challenges facing the regulation of corporate governance. Such a flexible, results-oriented approach to administrative law develops new principles and tests, rather than gives civil servants instructions. Such an approach to corporate governance can facilitate the assessment of company governance, corporate disclosure, the self-regulation of professional groups like lawyers and accountants, as well as ensure corporations engage in “legitimate economic purposes.” We engage with the literature, showing why such a flexible approach to administrative rulemaking would more likely reduce some of the government regulation and oversight problems exposed by the Panama Papers than previous approaches toward drafting and implementing administrative law (at least in this area).

I. Introduction

The Panama Papers revealed serious defects in Hong Kong’s corporate governance. Particularly, the scandal showed the lapses in the way Hong Kong’s government regulates and checks its financial firms and professional services providers. While Hong Kong’s government has failed to conduct (or at least publicly release) a study looking at the harms of the Panama Papers revelations, the European Union has. At first, the study looks like any other ordinary impact assessment – looking at the tax law, corporate law, and the regulation of financial institutions. Look more deeply though, and one sees a study about EU administrative law. The study looks at the rules the EU and its Member States’ ministries of finance should put in place to deal with the way they (these government bodies) should regulate, inspect and so forth. In other words, how EU member states’ (and the EU’s in general) administrative law should change. Administrative law represents an unloved branch of public law. Yet, as the Panama Papers revelations show, the way government ministries, agencies, and even independent bodies invested with public power, regulate and investigate (or not) strikes at the heart of administrative law. The old days of administrative law as fixed, specific rules – given to civil servants and other public officials – are numbered.

In this paper, we argue that a new way of thinking about administrative law is needed to remedy the problems revealed by the Panama Papers. That new way (not very new for many governments) involves regulating what public entities do and the goals of their work, rather than the way they do it. Government increasingly has and takes responsibility for the conduct of all kinds of groups in society – including companies. Government’s role in influencing corporate governance shows how and why we need to re-conceive of administrative law as a law of ends, rather than means. Such law can encourage groups to assess corporate governance (or not), encourage disclosure (or not), self-regulate (or not), and even nudge corporate and other types of law toward focusing on legitimate ends rather than regulating conduct. Any conception of administrative law as simply listing an agency’s rights and obligations sorely misses the need for ambiguity and flexibility in public administration (two features antithetical to the classic predictability-and-clarity way of understanding administrative law). Remedying the wrongs found in the Panama Papers will require rules far more results-focused and far less mechanical than most administrative law.

Each section of this paper illustrates how a more flexible, results-oriented view of administrative law (Hong Kong’s in particular) can help to remove the poor corporate governance identified by/in the Panama Papers. The first section presents data covering the major issues and problems in Hong Kong identified in the Panama Papers. The second section shows how government rules can encourage the practical, useful and accurate measurement of corporate governance quality. The third section discusses administrative law’s role in encouraging corporate disclosure. Such a role revolves far more around encouraging private actors to act (or not) than controlling or checking companies. The fourth section describes the way administrative law can channel the incentives of self-regulating bodies, like lawyers and accountants. The fifth section most concretely illustrates the issues arising in the previous sections – in the form of a principles-based test for legitimate economic purposes. Government has certain ends to incentivize – often developing administrative principles or tests to help guide civil servants as they channel private sector incentives. Each of these sections describes a facet of such incentivisation. The final section concludes.

We ask for the readers’ indulgence as we make our argument with the following limitations in mind. First and most importantly, we do not make the case for or against such an approach to administrative law. We only try to observe the world – and draw conclusions about the approach which would most reduce the problems identified by the Panama Papers. Our tone reflects the outcome of that consideration – rather than any attempt to sell the reader on any particular approach. Second, we do not provide a classical literature review, showing how our understanding of the form and needs of administrative law have changed over time. Instead, we grapple directly with this evolving view of administration law’s role in the broader legal framework through the four major reform areas identified by the Panama Papers. We apologise beforehand to any readers uncomfortable with our engaging the literature as we talk about changes in Hong Kong’s rules and regulations – giving almost a “literature review on the fly.” Third and relatedly, we do not survey every area of administrative law (or the public sector agencies in which such law holds reign). We use the specific area of law affecting corporate governance in order to illustrate broader trends affecting all areas of the public administration. We leave to the readers’ good judgement and prior knowledge the extent to which our analysis covers changes to the broader administrative field. Fourth, we write about prescriptive change in Hong Kong – describing the way law should effect normative rather than positive change. In other words, and parroting the literature we review, we talk certain reforms almost as a fait accompli. We do this to focus our paper on our main argument, dealing with the way our conception of administrative law must change, rather than weighing the pros and cons of each reform