China Securities Regulatory Commission (CSRC) has issued here regulations giving minority stockholders the ability to influence major decisions in the listed companies they invested in.
Daochi Tong, deputy director-general of the Department of Listed Company Supervision under CSRC, said Tuesday that the Regulations on Strengthening Protection of Legitimate Rights of Minority Stockholders is good news for investors in Chinese companies.
But, he acknowledged that it will be a transitional measure as the Chinese stock market is plagued by companies' lack of transparency leading to a loss of confidence by investors.
Under the new rules, firms whose stocks are traded on Shanghai and Shenzhen stock markets and their majority stockholders should create a mechanism allowing minority stockholders to vote on five major company matters.
A company cannot introduce a major business move if they do not win at least half of minority holders votes at the stockholder conference, according to the regulations.
These major moves include issuance of new shares by the listed firms, issuance of convertible corporate bonds, asset restructuring of the listed firms and overseas listing of the subsidiary firm of a listed company, according to the rules.
The rules require a listed firm to make public the number of minority stockholders voting at its meeting, the amount of stock they own in the company and the ratio of that number of shares to overall figure. The company must also release the voting results, the number of shares held by top 10 minority stockholders and their voting results.
The rules stipulate that listed firms should increase involvement of minority public investors at their stockholders meeting and provide an Internet-based platform for small investors to vote online.
Under the rules, listed firms are required to improve the function of independent directors, and the people who sit on the board but are independent of the listed firm, and the accuracy of the information they disclose.
The regulations also set out substantial measures to improve the supervision of listed firms and their senior managers.
(Xinhua News Agency December 8, 2004)
