Nearly three-quarters of corporate executives expect to increase
investment on the Chinese mainland over the next three years after
the introduction of a comprehensive bankruptcy law, according to a
survey jointly issued by Deloitte China and CPA Australia China
Division.
The survey of 480 executives from the mainland, Hong Kong,
Singapore and Malaysia found that investors are mainly positive
about China's new Enterprise Bankruptcy Law, which was enacted on
June 1.
The attitude towards the new law is underpinned by a workable
and transparent bankruptcy regime, which will help investors
identify investment risks and exit options if investments perform
poorly.
The new law unifies the bankruptcy regime for Chinese
enterprises on the mainland - including foreign- and
domestic-owned, and State- and privately-owned - and is more
comprehensive than the former bankruptcy law, which was implemented
20 years ago.
The former law said China had bankruptcy jurisdiction over only
State-owned enterprises, but there was nothing in place to protect
the more than 4.9 million privately owned companies.
"These reforms address the need for a more efficient and
effective redistribution of corporate assets, whether State-owned
or privately owned," said Derek Lai, national leader of
reorganization services at Deloitte China.
The new law embraces international standard practice and
introduces new concepts, such as debt restructuring.
Two-thirds of respondents said a formal debt restructuring
system would protect interests of a bankrupt company while half of
the respondents believe it would protect the interests of
creditors, according to the survey.
(China Daily June 28, 2007)