Major State-owned enterprises (SOEs) will continue to rope in
outside directors to raise the level of corporate governance, a top
official said yesterday as more companies seek to restructure and
list on the stock market.
"We have appointed 65 independent directors to 19 SOEs so far,
and we hope to raise the figure substantially to improve management
transparency and efficiency," said Shao Ning, vice-chairman of
State-owned Assets Supervision and Administration Commission
(SASAC).
The latest to do so is China Metallurgical Group Corp (MCC) the
nation's leading construction company which took on board five
independent directors yesterday as a prelude to its listing
plans.
The structure and operation of the SOE's board of directors
follow the model of State-owned Temasek Holdings of Singapore, an
MCC spokesman said.
In companies controlled by Temasek, the board of directors
generally comprises civil servants and private entrepreneurs.
"The move (to induct more outside directors) reflects China's
on-going effort to improve the performance of major SOEs," said
Hong Liang, an analyst with China Galaxy Securities.
Major conglomerates such as Shenhua and Baosteel were among the
first group of seven SOEs to invite outside directors as part of a
board restructuring last year.
The reconstituted boards are authorized to select managers,
assess management's performance, determine managers' compensation
packages, and decide on major investments as well as raising
capital.
This year, SASAC increased the number of enterprises for board
restructuring to 19.
At the end of 2005, SOEs under SASAC had assets of 10.6 trillion
yuan (US$1.34 trillion).
(China Daily December 8, 2006)