China pushes listed companies to strengthen Party building

By Xie Jun Source:Global Times Published: 2018/6/18 22:38:40

Measures will protect smaller investors

People pass by the office building of China Securities Regulatory Commission in Beijing. Photo: VCG

The government is pushing domestically listed companies to strengthen Party building and to participate in construction of an ecological civilization, according to an amendment on governance regulations for domestically listed companies.

Experts told the Global Times on Monday that domestic listed companies should take on social responsibilities, even though the economic returns may not be evident in the short term.

China's securities watchdog, the China Securities Regulatory Commission (CSRC), is seeking public opinion about the amendment, according to a statement published on the official website of the CSRC on Friday.

According to the new amendment, State-owned listed companies should include Party-building work in their corporate statutes, and companies should integrate Party leadership and corporate governance.

Dong Shaopeng, an expert advisor for the CSRC, told the Global Times on Monday that leading companies in any country should take on social responsibility, including political responsibilities.

"Companies have social attributes. They should not ignore social interests in the course of their development," he said.

According to Dong Shaopeng, Party building is not just about developing Communist Party members within the companies or planning activities. "It's about letting outstanding people, those with good political awareness and good technical abilities, bring their talent into full play in the management structure and production chain of companies," he said.

Dong Dengxin, director of the Financial Securities Institute at the Wuhan University of Science and Technology, said that Party member workers can help set a good example for other workers and spark their enthusiasm for work.

According to a report from Shanghai-based on Monday, a listed company Party-building alliance was launched on Friday in Wenling of East China's Zhejiang Province to promote the upgrading of listed companies.

The new rules also noted that listed companies should actively participate in ecological civilization construction and take a leading role in preventing pollution, protecting the environment and conserving resources. Listed companies are also encouraged to aid poverty-ridden areas in China to develop industry, nurture talent and expand employment.

"Those missions might not pay off in the short term, but in the long term they will boost the companies' economic benefits," Dong Shaopeng noted.

Protecting small investors

The new amendment also increases limitations on the controlling shareholders, actual controllers and relative parties of A-share listed companies in order to further protect the interests of investors, particularly medium and small investors.

The government also stressed in the amendment that institutional investors can participate in corporate governance and that intermediary agencies should play a more positive role in company management.

A Shanghai-based stock investor told the Global Times on Monday that small investors currently face a dilemma as listed companies often provide exaggerated information about their own development trends or profitability expectations, but after investors buy their shares, prices fall instead of rise.

"I think the government should strictly punish misleading company publicity before large-scale shareholding by big shareholders decreases," she said on condition of anonymity.

According to Dong Dengxin, smaller investors' interests are often violated by bigger investors through illegal activities such as insider dealing. "Now the biggest loophole in the domestic capital market is that it lacks a high level of honesty and judicial obedience," he noted, adding that external management, self-discipline by companies and the use of legal weapons by investors should all be in place to improve the situation.

Newspaper headline: China pushes firms to strengthen Party building

Posted in: ECONOMY

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