A total of 1,169 companies listed on the Shanghai and Shenzhen Stock Exchanges had started or finished their shareholder reforms by September 25.

 

However, 174 companies listed on the mainland are still yet to begin the reform process.

 

The reforms, also known as split share structure reforms, are among measures the government has taken over the past year -- along with legislative reforms for listed firms and corporate governance reforms -- to revive the capital market and improve its financial security.

 

Split share structure refers to the existence of both tradable shares and non-tradable shares owned by the state.

 

In order to make shares tradable, listed companies have to offer additional shares or funds to private investors to compensate for potential losses in the value of their portfolios when the publicly-owned shares hit the market.

 

During the past year, securities regulators have added the letter "G" before the stock short names of the companies which have completed their reforms. For example, Baoshan Iron and Steel Company, China's largest steel producer, became "G Baosteel".

 

As most listed companies have now concluded their shareholder reforms, the letter "G" will be eliminated after October 9, and the letter "S" will be added to their short names of those who have not yet completed the reform process.

 

Analysts believe this indicates the companies with all their shares circulated on the market are playing a dominant role in the mainland market.

 

Most of the 174 companies, which have not started their reforms, have suffered huge losses and their non-tradable equity has been frozen by the courts or banks.

 

Figures show in the first half of this year, more than 100 of the 174 companies recorded losses, and the non-tradable shares of more than 130 companies were used as collateral and have now been frozen.

 

Chinese securities regulators have ordered all listed companies to complete the share reforms by the end of this year, encouraging those that are in difficulty to invite mergers and acquisitions.

 

(Xinhua News Agency September 28, 2006)