Major State-owned enterprises (SOEs) will continue to rope in outside
directors to raise the level of corporate governance, a top official said
yesterday as more companies seek to restructure and list on the stock market.
"We have appointed 65 independent directors to 19 SOEs so far, and we hope to
raise the figure substantially to improve management transparency and
efficiency," said Shao Ning, vice-chairman of State-owned Assets Supervision and
Administration Commission (SASAC).
The latest to do so is China Metallurgical Group Corp (MCC) the nation's
leading construction company which took on board five independent directors
yesterday as a prelude to its listing plans.
The structure and operation of the SOE's board of directors follow the model
of State-owned Temasek Holdings of Singapore, an MCC spokesman said.
In companies controlled by Temasek, the board of directors generally
comprises civil servants and private entrepreneurs.
"The move (to induct more outside directors) reflects China's on-going effort
to improve the performance of major SOEs," said Hong Liang, an analyst with
China Galaxy Securities.
Major conglomerates such as Shenhua and Baosteel were among the first group
of seven SOEs to invite outside directors as part of a board restructuring last
The reconstituted boards are authorized to select managers, assess
management's performance, determine managers' compensation packages, and decide
on major investments as well as raising capital.
This year, SASAC increased the number of enterprises for board restructuring
At the end of 2005, SOEs under SASAC had assets of 10.6 trillion yuan
(China Daily 12/08/2006 page1)