Share reform process slows down
(Xinhua)
Updated: 2006-09-18 14:12
Only five companies listed on China's stock market announced they have
started shareholder reforms this week, far fewer than the average level during
the early rounds of reforms which aim to float shares that were previously
barred from trading.
Since April last year, an average of ten companies listed on the Shanghai and
Shenzhen Stock Exchange would announce the kickoff of their shareholder reforms
at the beginning of each week.
The reforms, also known as split share structure reform, are among measures
the government has taken over the past year - along with legislative reforms for
listed firms and corporate governance reforms - to revive the capital market and
improve its financial security.
Split share structure refers to the existence of both tradable shares and
non-tradable shares owned by the State.
To make shares tradable, listed companies have to offer additional shares or
funds to private investors as compensation for potential losses in the value of
their portfolios when the publicly-owned shares hit the market.
The market value of listed firms that have adopted the reform now represents
more than 90 percent of the total of the two Chinese bourses.
Still some 180 companies listed on the mainland market have not started their
reforms, most of which have serious problems such as huge losses or non-tradable
equity that has been frozen by the courts or banks.
Figures show in the first half of this year, more than 100 of the 180
companies recorded losses, and the non-tradable shares of more than 130
companies were used as collateral and have now been frozen.
Chinese securities regulators have ordered all listed companies to complete
share reform by the end of this year, encouraging those that are in difficulty
to boost reform by inviting merger and acquisition.
(For more biz stories, please visit Industry Updates)
|
