Legal Report on the Reform of State-Owned Enterprises (Volume 1)

Author: Qian Weiqing
Publisher:
Publish Date: 2004-08-01
Features: State-owned enterprises should adopt different legal forms for reform. State-owned enterprises in industries and fields that do not require state economic control should transfer their state-owned shares and investments to natural persons and corporate legal entities other than state-owned enterprises, achieving complete equity diversification. The fundamental approach to reforming state-owned enterprises is to transform them through a sound corporate legal system. The fundamental characteristic of a sound corporate legal system is: the separation of shareholders' property from corporate property; shareholders bear limited liability; the company has legal personality. The development of the company depends on the soundness and perfection of the corporate governance structure, which aims to achieve corporate interests and, in turn, the long-term greatest interests of shareholders by establishing and improving the company's incentive and supervision mechanisms. "Debt-to-Equity Conversion" must be combined with the transformation of state-owned enterprises into companies, and vigilance must be exercised to prevent bad debts from becoming bad equities. State-owned enterprises should adopt different legal forms for reform. State-owned enterprises in industries and fields that do not require state economic control should transfer their state-owned shares and investments to natural persons and corporate legal entities other than state-owned enterprises, achieving complete equity diversification. The fundamental approach to reforming state-owned enterprises is to transform them through a sound corporate legal system. The fundamental characteristic of a sound corporate legal system is: the separation of shareholders' property from corporate property; shareholders bear limited liability; the company has legal personality. The development of the company depends on the soundness and perfection of the corporate governance structure, which aims to achieve corporate interests and, in turn, the long-term greatest interests of shareholders by establishing and improving the company's incentive and supervision mechanisms. "Debt-to-Equity Conversion" must be combined with the transformation of state-owned enterprises into companies, and vigilance must be exercised to prevent bad debts from becoming bad equities.