The New Development of Corporate Governance in China. Prof. Lu Tong Director of Chinese Center for Corporate Governance Chinese Academy of Social Sciences 2002 May 16-17 , Seoul. China’s Economy:Dynamic Rapid Growth.
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Prof. Lu Tong
Director of Chinese Center for Corporate Governance
Chinese Academy of Social Sciences
2002 May 16-17 , Seoul
(2)65million investors represent a mere 5% of total population in China, compared with 18% in Hong Kong and 49% in the USA
(3)Entry into WTO will bring more opportunities in economic development
(1)a young capital market with short history;
(2)inexperience in market regulation;
(3)weak in enforcement of laws and rules;
(4)quality of listed companies and need for better corporate governance;
Among 1100 the listed companies 54% of shares are owned by state or state legal personal. At the moment,the Authorized Investment institutes (ie Holding company; National Assets Management Co;Group Co.)are on behalf of state.
“Agent risks”; “insider control”.In some ways the situation in China is not that different from the rest the Asia.But the difference between those families and the Chinese state is that the interests of the former is usually aligned with their management
(A)Shanghai Stock Exchange,March 2000;
(B)China Securities Regulatory Commission(CSRC),January 2002;
·Set up Independent Directors System in 2001;
·Tighter reporting and disclosure;
Civil compensation in Securities Law violation:
Legal basis for action by investors against law violator on stock market: The Securities Law;The Companies Law.In December 1998,Hongguang Industries touched off a civil compensation case due to false.Other cases of Zheng zhou Baiwen,ST Monkey King, Yian Tech and Yin Guangxia, which have been uncovered by CSRC, have all caused property lasses to investors.
By this I mean investment funds and brokerage houses. We have found there are issues in some of the smaller firms that find themselves in financial trouble, particularly in times of market downfall.You find it is because they did not have good risk management or internal control, or good corporate governance structure.
China is still in its initial stage in term of corporate governance. It is a big task in China to increase the awareness of the importance of corporate governance.But we must take the first step through education, setting up Codes & rules and enforcement.