BIZCHINA / Analysis
State share reform doesn't mean 'selling out'
(Xinhua)
Updated: 2005-06-27 14:41
China's top securities regulator said in Beijing on Monday, June 27, that
the reform on non-tradable shares introduced recently aims at eliminating
trading right difference between non-tradable and tradable shares, not
floating all non-tradable shares at the stock market.
"Making all shares tradable doesn't mean selling out all shares," said
Shang Fulin, chairman of China Securities Regulatory Commission (CSRC).
After the non-tradable shares become tradable, whether they would come
into circulation or not depends not only on the shareholders' strategic
choice, but also on relevant restrictions, said Shang.
He clarified the restrictions as follows: firstly, it depends on the
entire strategic layout of state-owned sectors. After the reform on
non-tradable shares is completed, state-owned shares can be cashed in
only upon the approval of the state-owned assets authorities.
Secondly, it depends on the intention of controlling shareholders. Even
though there are no restrictions in the laws and policies, the
controlling shareholders will hold a substantial amount of shares in the
long run in order to control the company.
The State-owned Assets Supervision and Administration Commission recently
released the Guidelines on the Reform on Non-tradable Shares of
State-controlled Companies, which specified the guidelines on the
proportion of state-owned shares in state-controlled companies in line
with the national economic restructuring and layout, as well as the need
to facilitate a sound development of the capital market.
Shang also said that the controlling shareholders should unwind shares
gradually according to the Securities Law and relevant regulations, while
disclosing relevant information properly at the same time.
He said that the CSRC would gradually carry out the reform on
non-tradable shares by following the principle of "pilot companies go
first and others gradually follow up." Currently, reform on thefirst
batch of pilot companies has been completed with a preliminary success,
he added.
Capital market at crucial turning point
China's capital market is at a crucial turning point of development, he
said at the press conference held at the Information Office of the State
Council, China's cabinet.
With a series of policies and measures in place to promote its sound
development, China's capital market has entered a period of adjustment in
structure and operating mechanism, said Shang
China's reform on its capital market now has clearer guiding principles,
goals and tasks, said Shang.
Positive changes are taking place in China's capital market as a series
of measures have been adopted to strengthen infrastructure construction
in the market, Shang said.
Though it is a hard process, the direction of development is clearly
defined, Shang said, adding that the market itself is also turning mature.
The internal mechanism that supports the operation of the market is under
adjustment and a new mechanism is being formed, said Shang.
Nevertheless, he said, China still faces arduous tasks to promote reform
and development of the capital market.
China started the latest reform on its capital market on May 9 to end a
split share structure -- one of the major problems blamed for the
country's sluggish stock markets.
Four companies were selected for the first round of reform experiment and
42 more were involved in the second round kicked off on June 19.
Transparency in stock market reform promised
Shang promised that more effective efforts would be adopted to promote
transparency in the country's stock market reform, especially the
on-going reform on non-tradable shares, to stop inside trading.
In response to questions at the press conference, Shang Fulin said the
reform on non-tradable shares is not "at any cost" as some people
claimed." Instead, it will be carried out on the judgment of the overall
and long-term benefits arising from the reform."
He said the reform is a very complicated issue, and the CSRC will take
all related issues into consideration when formulating reform rules and
regulations, including the reform of companies that have both A and B
shares listed on the mainland stock market and H shares listed on the
Hong Kong bourse.
(For more biz stories, please visit Industry Updates)
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