Decision targets reform of State enterprises
By Fei Li (China Daily)
Updated: 2006-02-23 05:52

The government's decision to introduce a stock option plan in overseas-listed SOEs is just the latest move to reform the SOEs and also a sign that SOE reform is accelerating.

It comes at the heels of a relaxation last month of a nine-month-old ban on management buyouts (MBO) in large-scale SOEs.

Following then widespread public concern that MBO were causing State asset losses, authorities issued a rule last April freezing the MBO in large-scale SOEs.

State-owned Assets Supervision and Administration Commission (SASAC), the country's State company watchdog, relaxed the ban on January 22, allowing limited purchases of shares by SOE executives.

In a bid to alleviate public worries that some SOE managers may make use of the new regulation to their own gain and thus result in losses of state assets, SASAC issued detailed guidelines on how those shares buyout activities could be carried out. The new rule, for example, requires that executives should provide certificates that can prove the validity of their capital sources for their share purchase.

(China Daily 02/23/2006 page11)