China issues statute regulating state-owned assets transfer

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Last updated at: (Beijing Time) Tuesday, December 16, 2003

China issues statute regulating state-owned assets transfer

The State-owned Assets Supervision and Administration Commission of the State Council (SASAC) issued a statute Monday to regulate the ownership transfer of state-owned enterprises (SOEs).

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The State-owned Assets Supervision and Administration Commission of the State Council (SASAC) issued a statute Monday to regulate the ownership transfer of state-owned enterprises (SOEs). The statute sets policies directing 10 major steps of transferring SOEs to joint-stock companies, including ratification, assets clarification and checking, auditing, assets evaluation, deal management, price-setting, fund-raising management, protection of the creditors' interests, protection of the employees' legal rights and management buy-out (MBO).

Transferring SOEs to joint-stock companies has been a crucial factor in China's economic reform. Problems like simplified and lax property evaluation often arise during the transactions due to the lack of laws or regulations.

Under the statute, SOEs can transfer their property rights through regrouping, alliance, merger and other ways, and must invite qualified asset-evaluation offices to evaluate the property concerned according to the Regulations on the Management of State Property.

The lowest price of state-owned assets should be set on the basis of the evaluation results, and take into consideration such factors as the supply and demand of the property market, the market price of the asset, accommodation of staff and introduction of advanced technology.

For listed companies, the price of state-owned shares should beset according to the company's performance and profits, and above the net asset of every share.

Money for buying the state-owned assets should be paid at one lump sum, but amortization within one year will also be accepted after approval.

The statute strictly prohibits "self-buying" of state-owned assets. Managers responsible for the poor performance of a company's operation cannot buy its state-owned assets.

Managers buying the state-owned assets of their own firms should not participate in key decisions of the property transfer, and funds raised for the deal should not be borrowed from the companies in question, or through the mortgage of the company's state-owned assets.

Senior official vows to improve management of state assets

A Chinese senior official said in Beijing Monday the government will further promote the reform of the asset management in state-owned enterprises (SOEs) in 2004.

Li Rongrong, director of the State-owned Assets Supervision and Administration Commission (SASAC), said at a meeting attended by major SOE executives that the reform includes five aspects:

-- to improve the rules and regulations on the supervision and administration of state-owned assets;

-- to improve the assessment of SOEs' performance and carry out research for the establishment of a budget system for the management of state-owned capital;

-- to further explore ways to select enterprise managers through open competitions and cultivate and select more talents for SOEs;

-- to strengthen the supervision over and upgrade the management of state-owned assets; and,

-- to actively push forward the restructuring of the state economy and speed up the development of a batch of big companies or big enterprise groups with international competitiveness.

The official said a contingent of high-profile talents should be formed to develop SOEs. At present, the SOEs under the supervision of the SASAC have a total of 9.17 million staff.

Regarding the SOE reform, Li called for efforts to establish a modern enterprise system and corporate governance, accelerate enterprise restructuring by adopting the share-holding system, attract foreign and non-governmental capital, deepen the reform of the employment and personnel systems, and separate SOEs' major businesses from attached ones.

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