The State-owned Enterprises To Implement The Management Buyout Of The Legal Obstacles To Its Breakthrough

As a new system arising from the US, the Management Buy-outs helped the American corporations settle the conflict of interests between the board, the managers and the shareholders. This system tries to make the managers the boss of the corporation they work before, and which will trigger a new impulse for better performance of the management. However, when this system is introduced to the former USSR and East European Countries, the Management Buy-outs has become the tool for the managers to steal the state-owned assets, and has caused the gigantic drain of the state-owned wealth. The similar situations happen in China today, and therefore the system was stopped by the administrative organs. The author held that the Management Buy-outs can help Chinese State-owned Enterprises to quit some fields and encourage the management of the State-owned Enterprises to work harder to develop the enterprises better. However, Management Buy-outs shall be operated under the support of relevant systems mainly the inner restriction on the decision making by Corporate Governance and the outer restriction on the transferring procedures by Government Supervision. Only by the two restrictions, can this system play a meaningful role in China Today. This dissertation is consisted of five parts, namely Preamble, Part One, Part Two, Part Three and Conclusion. The Preamble is the basic introduction of the purpose of the dissertation, the method of discussion and the answers to the issue on discussion. Part One is the basic introduction of the definition of MBO and the MBO in China. The author tells out that the MBO in China is different from the original meaning, and the State-owned enterprises are in the risks of assets drain. Then the author believes the hidden reason of the assets drain is the loose control on the management's behavior and the unjustified transferring procedure, by which the author makes the base for further discussion. Part Two is on how to make tight control of management's immoral behavior under the corporate governance. First, the author held the immoral behavior of management shall be banned for violating the duty of royalty, and then the author analyzed the loose control of the management's behavior, and in the end he provides suggestions of introducing new systems to enhance the control of board, such as the appraisal right exclusion, the outside directors, and the enhancement of supervisory committee. Part Three is on how to build up a good supervision on the transferring procedures. The author held that the supervision of the State-owned Assets Supervision andManagement Organ is very important in keeping the transferring procedures work.The author divided the participants of assets transferring into different groups, anddiscussed what their duties respectively are. Then the author gave out the suggestionon how to make these participants work independently. In the conclusion, the author collected all his views and suggestions on how tomake the MBO out of assets drain, and emphasized the importance of legalgap-filling.