China Securities Index Co Ltd (CSI), the securities indices
provider, said yesterday that it is preparing to launch a new index
on the governance of China-listed companies.
The new index, which is expected to be launched at the Shanghai
Stock Exchange on January 1, 2008, will list companies according to
their corporate governance.
This is the first time for China to introduce a criterion to
evaluate corporate governance.
The new index aims to strengthen corporate governance, and will
provide mutual fund companies with an underlying index for new
products, according to the CSI.
The qualified companies need to have been listed on the Shanghai
bourse for 12 months, or listed in other bourses for 12 months and
also listed in Shanghai.
The companies must not have violated any regulations in the past
three years, had their stock listed as "Special Treatment (ST)",
"*ST", or called a listing halt, according to a draft notice from
the CSI.
After the application process, the selected companies will be
appraised both by the public and industry experts.
Public assessment is expected to begin at the end of next month.
Investors can see the companies' information online and vote on
it.
Meanwhile, CSI will organize a team consisting of security
companies, fund management companies, insurance companies and other
assessment institutions to appraise the corporate governance of the
selected firms.
At the final stage, CSI will set up a consultative committee of
experts to review the methods, process and results of the
appraisal, select companies and compile the index before December
this year.
CSI said it would revaluate and adjust the constituent stocks in
the sector every year.
"Introduction of the index will help the government to better
supervise listed companies' management and protect investors'
interests," said Zhang Zongxin, a professor at Fudan
University.
"Besides, it is expected to be welcomed by institutional
investors, including fund and securities companies, which favor
well-managed companies as an investment target," he added.
"Diversified indices can meet the requirements of specific
investors, and the corporate governance index will help investors
invest more rationally," said Zhu Haibin, an analyst at Essence
Securities.
(China Daily September 24, 2007)
