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| China gets tough on appropriation of funds of listed companies |
BEIJING, Oct. 13 (Xinhua) -- China's stock market regulators are cracking down on the appropriation of funds of listed companies by controlling shareholders, saying those who fail to repay by the year end face prosecution.
The China Securities Regulatory Commission (CSRC) made the decision at a meeting in Changsha, capital of the central Hunan Province, after Premier Wen Jiabao personally intervened in the matter, CSRC sources told Xinhua.
CSRC deputy chairman Shang Fulin said at the meeting that local regulators should preserve evidence gathered in investigations for possible prosecutions.
The appropriation of large amount of funds of listed companies by the controlling shareholder and the existence of a controlling majority of non-tradable state-owned shares in most listed companies have been two leading issues afflicting China's burgeoning stock market.
As the shareholding reform that turns non-tradable shares into tradable shares has almost come to its end, the other issue is becoming even more imperative for the regulators to resolve.
"The solving of this chronic problem will go a long way to protect the interests of public investors, improve the corporate governance of listed companies and ensure the healthy development of the stock market," said Teng Tai, of China Galaxy Securities.
The initiative to solve the issue began in November 2005, when the State Council approved a CSRC report on improving the quality of the country's 1,300 listed companies.
The report set the end of this year as the deadline to solve the issue.
In June, China's legislative body adopted an amendment to the criminal code that makes appropriation of a listed company's funds by controlling shareholders a crime.
CSRC figures show that by the end of September, 309 listed companies had retrieved 20.4 billion yuan (2.58 billion U.S. dollars) that had been appropriated by their controlling shareholders.
However, 102 listed companies still had a total of 25.4 billion Yuan outstanding to their controlling shareholders.
The Shanghai Securities News reported on Friday that at least 15 executives had been probed, arrested or prosecuted for appropriating funds.
To date no officials of state-owned parent companies had been charged for appropriating funds of their listed branches. Enditem
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