China's Major SOEs Urged to Improve Legal Systems

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Last updated at: (Beijing Time) Friday, July 11, 2003

China's Major SOEs Urged to Improve Legal Systems

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The 196 major state-owned enterprises (SOEs) supervised by the State Assets Supervision and Administration Commission (SASAC) should improve their legal systems by employing legal directors, said SASAC vice-director Huang Shuhe on Thursday.

Just 550 full-time legal staff worked in the 196 enterprises, far fewer on average than large foreign enterprises, which usuallyhave over 200 legal staff each, Huang said.

Statistics show that most SOEs lack satisfactory legal systems,with 73 percent lacking sound enterprise regulations to prevent operating risks, 63 percent lacking regulations for legal auditingof contracts, and 44 percent without legal assessment systems, resulting in poor management and poor records in legal disputes.

Huang said the employment of legal directors was common international practice to help an enterprise operate according to the law, because the director was one of the policy-making membersand could help the company effectively avoid operational risks.

Twenty-four SOEs are operating with legal directors, and the SASAC would increase the number through regulatory measures, he said.

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