The
State
Economic and Trade Commission and the
China
Securities Regulatory Commission said they will examine China's
listed companies to make sure the firms are implementing a modern
corporate system.
During the investigation from now until November, the State
Economic and Trade Commission will focus on the behavior of
shareholders, while the securities regulator will review the
conduct of listed companies, according to Jiang Qiangui,
vice-minister of the State Economic and Trade Commission.
A
modern corporate system is the key to the sustained growth of
Chinese enterprises and a healthy stock market, Zhou Xiaochuan,
chairman of the securities regulator, said at a national
teleconference in Beijing at the weekend.
Improving such a system in listed companies is also crucial to the
development of China's State-owned enterprises, given that listed
State-owned enterprises contributed 63 percent of the total profits
generated by State firms in 2000, said Jiang.
China had registered 1,169 listed companies by last month. They
have a market value of 4.55 trillion yuan (US$548.2 billion),
representing half of the country's gross domestic product,
according to Zhou.
Although the listed firms have made headway in improving corporate
governance and internal management, they have yet to exert
themselves to meet the high standards of a modern corporate system,
Zhou said.
The State holds the majority of shares in many listed companies.
Both Zhou and Jiang said that this dominance threatens to undermine
the interests of small and medium-sized shareholders.
In
particular, some government departments and controlling
shareholders have interfered with the operations of listed firms.
Some listed companies are not genuinely independent from
shareholders in terms of staff, finance, assets and business
activities, Zhou said.
Another problem with listed companies is that some of them provide
fake accounts and false information to fool investors, which adds
to the risks in the securities market, Jiang said.
Furthermore, the listed firms have yet to adopt an income
distribution system that gives enough incentives to good management
performance, which a modern corporate system requires, Jiang
said.
(China
Daily May 13, 2002)