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Standards for SOE Buyouts Released

2005-4-15 9:45:55 CRIENGLISH.com

Management buyouts of State assets and equities at big State-owned enterprises have been banned, a new regulation released yesterday says.

The long-expected rule, however, allows such transactions at small and medium-sized State-owned enterprises (SOEs) while setting up a formal series of standards.

The criteria on such sales were clarified by Chinese authorities for the first time.

The regulation was jointly released by the State-owned Assets Supervision and Administration Commission (SASAC) and the Ministry of Finance.

The standards include setting qualifications for management buyers of smaller and mid-sized firms, procedures and venues for dealings and relevant financing channels and information disclosures procedures.

The regulation is designed to ensure transparency and fairness in management purchases of State-owned property, a popular practice in China's SOE reforms in recent years but one that was meantime accompanied by many problems like self-dealing, illegal financing and erosion in the interests of the State and ordinary employees due to legal loopholes in the sector.

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