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).
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