With the last two companies getting the nod from shareholders last Friday, the 42 pilot firms selected for the second round of share-merger reform have all seen their plans approved.

The conclusion of this round, of stock reform within two months is quicker than expected.

In the previous round, one of the four pilot companies failed to sell its reform plan, ostensibly due to a lack of flexibility in talks with public shareholders.

Not only having more participants but also being more representative of the industrial mix of listed companies, the latest round of reform has gone smoothly thanks to better communication between majority shareholders and public investors.

It seems the securities authorities' promise to strengthen protection of the interests of public investors has been kept so far.

This suggests implementing a similar share-merger reform plan for the 1,300 companies listed on domestic stock markets has a fair chance of success. But to say the reform programme has worked now is premature.

The ongoing reforms that will mean the end of the split share structure, which has crippled China's stock markets in recent years, are long overdue.

Non-tradable shares owned by State and legal entities account for about two-thirds of all Chinese counters. Their existence has both posed a lingering threat to a market flooded by cheap shares and undermined public supervision of majority shareholders.

After a four-year bear market, the heavy losses most investors had suffered and the even more serious loss of the stock market's fundamental role in bettering capital allocation finally persuaded the securities authorities early this year to put an end to the split share structure.

During the two rounds of experimental reforms, lump sum compensation in cash, shares or other forms was offered by majority shareholders to public investors to allow their non-tradable shares to float.

Though some argued there was a lack of legal basis for such compensation at the expense of State shares, the reforms have gained widespread support from the market for at least reflecting reality.

Historically, in the interests of majority shareholders, the split share structure largely boosted market prices at the cost of public investors. Even if not legally, majority shareholders morally owe public investors compensation as they have sought to float cheap non-tradable shares.

The successful conclusion of pilot reforms may be a guide for future reform. Even so, the all-round implementation of a share-merger reform programme will pose many new problems.

Unlike the 46 pilot companies, some listed firms' performance is too poor to support compensation, and some blue chips may only be willing to pay a little.

The favourable market conditions the securities authorities are so desperate to create will not last long as reformed companies begin to raise funds, putting pressure on the recent rally of stock indices.

The performance and corporate governance of listed companies are the decisive factors determining their own long-term value as well as that of domestic stock markets.

So far the pilot reforms have only laid down the foundation for improved performance and supervision of listed companies.

The reform will have to take much more aggressive action in terms of market regulation, enterprise reform and legal enforcement to make domestic-listed companies valuable and accountable to public investors.