On The Exercise System Of State-owned Shares

With the advancing of the reforms on State-owned enterprises (SOEs) and State-owned assets (SOAs) manage system in China, the State property has been transformed into State-owned shares (SOSs) in SOEs gradually, and SOSs have been become the main existence of State-owned capital. Moreover, with the achievement of stock right decentralized allot revolution, diversity of equities has become very clear in SOEs. How to exercise SOSs successfully by State shareholders and their representatives considering all-tradable of stock market, that is not only concerning about the operate efficiency of SOAs, but also ultimate victory of the SOEs revolution. In this case, the thesis takes the State-owned Capital Holding Company (SCHC) for example, to study the exercise system of SOSs under the background of transition economy from legal perspective. Through a comprehensive study in this area from China to other countries, as well as an inspection to enforceable legal system and existing problems in the practice of SOSs, the author discusses the characteristics of SOSs exercise, and tries to analyze fully and deeply about the SOSs exercise systems including substantive law and procedural law, which are made up of shareholders, rights and obligations, exercise means, supervision and liability investigations.An important proposition in this thesis is that we should prefer corporate governance idea to government administrative idea to guide the exercise of SOSs. The proposition looked very simple, but runs through the whole reforming process of SOEs and puzzles people. Although SOSs have inherited some characteristics from State property, their exercise system should be constructed under the framework of company law. Furthermore, the nature of SOSs is displayed as common rights, with double characteristics including public powers and private rights, which tells us there must be some differences about exercise systems between SOSs and private shares. Due to the survey of SCHC, dual-comparisons are made between SCHC and solely State-owned company (SSO), SCHC and private capital holding company (PCHC), through which the author demonstrates that State shareholders’status and control-mechanism are very specific. The status is mainly embodied in the personnel placement, and the control-mechanism is mainly embodied in the super-holding position. The above views are also proved by the practical activities in SOEs, which can be summarized as the biggest problem that“out of controlling”in fact but“excessively controlling”in surface by the State shareholders. This problem is attributed to several factors, such as generalized ownership of SOSs,“Agency Cost”between State shareholders and their representatives, too much government administrative idea enforced in SOEs, State shareholders prefer administrative means to exercise shares, as well as the neglect of the construction of civil compensation liabilities systems.Balance of interests is an ideal realm pursued by legal system, which can be seen clearly among the area of SOEs governance and SOSs exercise. This thesis argues that we must make a choice or balance between corporate governance idea and government administrative idea when it comes to the theoretical path to solve the problem that“out of controlling”camouflaged by“excessively controlling”in the SOSs exercise. In the SOEs internal field, corporate governance idea must be insisted, to the efficiency of SOSs exercise and common interests of both enterprise and other stakeholders, which composed the important part of SOSs exercise system. But for the fields of SOEs external supervision and State shareholders themselves, moderate government administrative activities is also been needed, to the overall benefits for the whole country. On the basis of the theory above, connected with regulations and practices in the fields of SOEs governance abroad, the thesis advocates that the exercise of SOSs must be concerned under the background of favorable corporate governance mode and system environment. From detailed contents not forms, this governance mode should be made of governance of State shareholders, internal governance and external governance of SOEs. Therefore, it’s not a simple question about corporate institution setting or internal institution balance of company, nor governance by shareholder or stakeholders, which has been discussed too much to disclose individuality and requirement of SOSs exercise.Based on the considerations and conclusions above, the thesis continued with specific suggestions and arrangements which are divided into two parts including substantive law and procedural law, for the exercise system of SOSs. For the substantive part, the author mainly studies subject system, rights and obligations as well as exercise methods. Combined with achievements about the status and function of the State-owned assets supervision and administration commission (SASAC), the author presents a subject system centrally constructed by State Holding Company (SHC). As a State shareholder, SHC must possesses identities of commercialization, specialization and privatization of law, which can not be afforded by the government and his departments. Market-based mechanism must be concerned when State shareholders select their representatives in SOEs, whose rights and obligations should be established under the framework of Company Law. The representatives should have rights of residual claim and residual control, with undertaking of residual risk meanwhile. Maybe it’s a hackneyed theme, but not meaningless, that the thesis suggests to found an State-owned Assets Administration Commission belonging to the People’s Congress (PCSAC), instead of SASAC at present. This theme can help Trust Theory mentioned in the following text take its effectiveness greatly, through which to support State-owned Assets Trust (SAT) and trusting exercise method of SOSs. In addition, improvement on the concept and methods of holding rights is very important to the perfection of SOSs exercise methods, and the point is to introduce“Special Shares”as well as the SAT. Moreover, the author also studies other topics, such as State shares transfer, minority shareholders protection and hostile takeover. In terms of rights and obligations, the thesis approves that State shareholders and their representatives have to undertake holding-obligation and fiduciary duty, which based on different subjects of right. The core of the obligations is to respect and protect property interests of SOSs.As for the part of procedural law, the thesis focuses on the study of evaluation and supervision, as well as liability investigation systems. The author grasps the property interests of State-owned assets owner, SOEs and minority shareholders, points out that the biggest problem is too much dependence on administrative accountability and criminal punishment instead of concerning about the protection of property interests. This problem can be also obtained by the evaluation indexes and the procedural investigation and suit. Way to solve the problem is to paying much more attention to property interests of SOSs, any behavior by infringing exercise of SOSs should be punished through strict property liabilities, which can compensate the interest loss of subject as well as a deterring to lawbreakers. Finally, the thesis focuses on the property protection system when State assets owner and SOEs are considered as representatives of social public interests, with a discussion on the plaintiff of Public Interest Litigation in the field of State-owned Assets in the end.