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China issued new guidelines for listed companies
(Xinhua)
Updated: 2006-03-21 16:03 The China Securities Regulatory Commission (CSRC)
has just issued the amended guidelines for the constitutions of listed
companies, which was first published in 1997, the China Securities Journal
reported Tuesday.
The new guidelines seek to improve corporate governance by limiting the power
of executives to prevent power abuse or fraudulent transactions that have been
prevalent in some listed companies.
It states that the highest authority in a listed company is the conference of
shareholders, not the board chairman, and that any major decisions must be
approved by the conference.
To prevent the control of companies by insiders, senior managers and
employees' representatives must not account for more than half of the directors
in the board.
Shareholders can not vote on transactions in which they are
involved and only the conference of shareholders can appoint accounting firms.
This is designed to prevent accounting frauds.
Board members, supervisors and senior executives were formerly banned from
selling their shares during their tenure. Now they are allowed to sell them one
year after the stocks are listed or six months after termination of service. In
any given year, they can not sell more than 25 percent of the shares they have
in the company.
China currently has around 1,300 listed companies. The poor performance and
bad management of some firms are often blamed for the disappointing performance
of the stock market, despite the dynamic national economy.
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