By DRC Research Team

2018-9-16

Mixed-ownership economy is an economic system in which state-owned capital, collective capital, non-public capital are cross-shared and integrated. The reform and development of mixed-ownership enterprises need us to provide effective protection to the property rights of both state-owned and non-state-owned shareholders. Only when all kinds of entities enjoy equal status and rights and their legitimate rights and interests are guaranteed, can investors of all kinds be assured to participate in investment, and the vitality of mixed-ownership enterprises can be brought into full play.

I.Prominent problems and disadvantages exist in protecting the property rights of mixed-ownership enterprises. 1. There are three prominent problems in the protection of property rights of mixed-ownership enterprises: the inequality of the rights of major state-owned shareholders and minority shareholders; the inequality between the state-owned property rights and non-state-owned property rights in the judicial protection; and the inadequate protection of the interests of employees who share stock ownership in mixed-ownership enterprises. 2. The inequality and insufficiency of property right protection have many disadvantages to the development of mixed-ownership economy. The above three problems have affected the enthusiasm of non-state-owned capital in participating in the reform of state-owned enterprises. With their reluctant participation, the vitality of enterprises cannot be stimulated, which would go against the development of mixed-ownership economy. Firstly, non-state capital would have more concerns in participating in the reform of state-owned enterprises. Secondly, it is not conducive to the transformation of business mechanism after the reform. Thirdly, it may lead to judicial confusion. Fourthly, the inadequate protection of employees’ stock ownership interests may result in the hidden danger of instability in the future.

II.Policy recommendations for improving the property right protection of mixed-ownership enterprises are made as follows. The full development of mixed-ownership enterprises and the full play of their role need to be ensured by appropriate institutional conditions and legal environment. Therefore, it is suggested to weaken the identity of investors, reform relevant provisions in the Criminal Law and the Company Law, and actively use the articles of the company charter and the shareholders’ agreement to establish a legal system that can protect the legitimate rights and interests of investors, give equal treatment to property owners with different capital sources and give them equivalent legal protection. 1. We need to amend relevant provisions of the Criminal Law and promote the reform of criminal justice to provide equal protection to property owners. First, make unified stipulation regarding public and private property. Second, expand the crime that only applies to staff of “state-owned companies and enterprises” to staff of “companies and enterprises”. Third, give equal evaluation for similar acts. 2. We need to improve the relevant provisions of the Company Law on equity issuance and allow companies to set up the structure of classified stocks and dual stock equity. First, allow companies to set up classified stocks, and second allow investors to negotiate and make commitments in the articles of the company charter to establish a dual stock share structure. 3. We need to supplement the provisions of the Company Law on equity transfer, expand the application of the right of dissenting shareholders to claim for repurchase, and clarify the mechanism for determining the repurchase price. First, expand the application of the dissenting shareholders’ right for share repurchase. Second, supplement the mechanism for determining the price of repurchase. 4. We need to formulate the guidelines on the articles of company charter for mixed-ownership enterprises to guide enterprises to make full use of the articles of company charter to protect the interests of small and medium shareholders. First, fully guarantee the small and medium shareholder’s access right to company information. Second, make commitments for the exclusive rights of small and medium shareholders. Third, set special voting rights for small and medium shareholders. Fourth, give small and medium shareholders the rights to nominate company directors.