China said Thursday it will continue the country's ongoing share reform in an orderly manner and on the basis of maintaining stable development of its capital market while protecting the legitimate rights of investors.
Participants at a meeting held by China's Share Reform Leading Group comprising of five ministries said the reform has been going on smoothly since the Chinese government approved the pilot share reform on April 29 of this year.
The five ministries or commission include the China Securities Regulatory Commission, the country's securities watchdog and China's State-owned Assets Supervision and Management Commission, which controls the country's leading state-owned enterprises that dominate most economic sectors.
Provincial officials in charge of the reform also attended the meeting, which called for continuity of policies to ensure the success of the reform.
The Chinese government published a nine-point strategy to revive the capital market in February, 2004, stating that a sound and healthy capital market is essential for the country's economic reform and development. China's two stock markets, which were created 15 years ago in Shanghai and Shenzhen, respectively, have fallen continuously since 2001. Poor corporate governance and untradable state share problems have been blamed for the poor market performance in the past few years.
The ongoing reform was designed to make the untradable shares, about twice as much as the tradable ones, tradable through arrangements between the listed firms or their controlling share holders and public investors.
Under the arrangement, most listed firms or majority stock holders pay compensation to minority stock holders in exchange for the mass untradable shares held by the firms or the majority stock holders to be able to be floated on the market.
Minority stock holders were given about two to four shares in compensation for very 10 shares they have.
The Chinese national legislature recently amended the country's securities and corporate laws in a bid to crack down harder on crimes involving securities and give state-owned firms greater access to the capital market.
(Xinhua News Agency November 11, 2005)
