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New guidelines for listed companies
(Xinhua)
Updated: 2006-03-21 16:10 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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