Index

A-B Holdings (Anheuser-Busch authorities International Holdings Inc.) 139, securities and regulatory, cross- 140, 146–7, 148, 149, 235–6 border cooperation and dispute accounting resolution 73–6 Generally Accepted Principles see also CSRC; HKEx; SFC (GAAP) 107, 108, 111 independent directors’ qualifications Baiyu, Ma 113 and 95–6 Bank of see PBoC integrity in financial disclosure, Basic Law (Hong Kong) 22–3 community role in maintaining Bebchuk, Lucien Arye 240 112–13 Beida Jade Bird Universal 64 Law 106, 113 Beihai Brewery 141, 142 new standards improving quality Beijing Department Store 36 of financial disclosure Beijing Light Bus Co. 36 106–13 Beijing Tianqiao Beida Jade Bird 64 Regulations for Joint Stock Limited Beijing Tongrentang Ltd 64 Enterprises 106 Beijing Town and Country Trade Rules (Hong Kong) 168 Centre 36 standards, efficiency and 224 Beiren Printing Machinery Standards for Business Enterprises Corporation Limited (ASBE) 106, 111 1994 Annual Report 242–3 Statements for Joint Stock Limited 2000 Annual Report 244–5 Enterprises, Chart of Accounts 2005 Annual Report 246–7 and 106 case study 138–9, 175–6, 199–201 actions see class actions; criminal management structure and actions; derivative lawsuits; direct composition 178–9 lawsuits; joint actions performance 179–80 Anderson, C. 92 share capital structure and Anhui Masteel K. Wah New Building shareholders 176–7 Materials Co. Ltd. 183 IPO 31, 36–7 Asia, ‘legal origin’ hypothesis and ongoing communication and regular 239 reporting requirements and Asiamoney 95 108 Asset Management Companies 116 share-ownership system reform and Association of Board Secretaries of 128 Listed Companies 98 Beiren Printing Machinery Holdings Australia Ltd 7, 252 financial disclosure and 112 BGC (Beiren Group Corporation) insider and outsider systems and 175–6, 177, 178, 180 233 blockholder control, insider system ‘legal origin’ hypothesis and 238 and 237–8 regulatory reform 6 see also shareholders

297

Alice de Jonge - 9781848442788 Downloaded from Elgar Online at 09/28/2021 02:08:22AM via free access 298 Corporate governance and China’s H-share market boards of directors China Construction Bank 197 Beiren 178 China Development Finance 33 Dongfang 198–9 China Dongfang Electric Corporation Guangzhou Shipyard 166 see DFEC Kunming 190 China Eastern United Petrochemical Maanshan 184, 185 (Group) Company Limited see 161–2 CEUPEC state influence on 139 China Everbright group 25 Tianjin Bohai 194 China Insurance Regulatory Tsingtao 147–8, 149 Commission see CIRC Yizheng 162 China International Economic and see also directors; management Trade Arbitration Commission 75 Bohai Corporation see Tianjin Bohai China International Investment (Group) Corporation 21 Company China International Trade and book building, IPO price Investment Corporation see determination and 29–30 CITIC Britain see UK China Jialing Industrial 122 burden of proof, misrepresentation China National Petroleum and 90–91 Corporation see PetroChina Burma, PRC’s ‘open door’ policy and China Oilfield Services 56 14 China Petrochemical Corporation see buyback plans, Tsingtao and 145–6 CPC Buyback Procedures 127 China Petroleum Corporation see Corp Capital Market Guidelines 123 China Resources 25 CBRC (China Banking Regulatory China Securities Depository & Commission) 57, 58, 117 Clearing Corporation 125 CCP (Chinese Communist Party) China Securities Regulatory Committee, corporate governance Commission see CSRC role 103–5, 166 China Southern Securities 58 Company Law reforms and 145 China State Shipbuilding Corporation pervasive influence 240 see CSSC regionalism and 13, 14, 15–16 China Telecom 56 zhuada and 141 China Travel 25 see also state China Venture Capital Group Ltd 60 Central Bank see PBoC Chinese Communist Party see CCP CEPA (Closer Economic Partnership CIRC (China Insurance Regulatory Arrangement) 23, 24 Commission) 57, 117 CEUPEC (China Eastern United CITIC (China International Trade and Petrochemical (Group) Company Investment Corporation) 151, 152, Limited) 153–4 155, 159, 162 Cha Shi May-lung, Laura 60, 62 Civet Investment Co (Hong Kong) 162 Cheffins, 236–7 Civil Law General Principles 90 Chengdu Top Sci-Tech Co Limited 56, Civil Procedure Law 88, 94 64 civil remedies Cheung, Stephen Yan-Leung 8, 224, CSRC role and powers and 59–60 233 misrepresentation and 90 China Banking Regulatory shareholders, for, under new Commission see CBRC legislation 91–4

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SFC and 67–8 Company Law 1994 see also criminal actions insider control and 83 class actions, shareholder rights and 93 securities market evolution and 35, Closer Economic Partnership 39 Arrangement see CEPA share market overview and 55 Coffee, John 237, 238 shareholder meetings and 84 Commercial Bank Law 115, 116 shareholder rights and 88 Commercial Banks, Provisional Standard Opinion for Joint Stock Regulations on Intermediary Limited Companies supplanted Businesses of 116 by 22 Commission of Science Technology Tsingtao restructuring and 145 and Industry for National Company Law 2006 Defence see CSTIND CCP corporate governance role and committees 104, 105 audit, H-share companies and 99, independent directors and qualified 100 personnel and 96 boards of directors and 99–101 insider control and 83 CCP 103–5, 166 insider system and 239 POR, of CSRC 61–2, 63 shareholder meetings and 83, 84, remuneration 99, 100 85–6, 87 supervisors and 101–3 shareholder rights and 91, 92–3, 94 see also supervisory committees supervisory committees and 101 communication company secretary, HKEx Listing ongoing, requirement for, financial Rules and 98 disclosure and 108–11 conflict of interest, SFC and HKEx supervisory committee role 101–2 listing requirements 69–70 companies convergence Chinese characteristics, with 9–10 corporate law reform, in 1–9 H-share, selection and flotation of family analogy and 12 first batch 27–34 formal, financial disclosure and HKEx-listed, Mandatory Provisions 106–8 for 23–4 globalization and 10 Joint Stock, Tentative Measures insider and outsider system, Concerning Administration of regulatory reform and 234–5, State-Owned Equities of 54 236 Joint Stock Limited, Standard cooperation Opinion for 22 cross-border Limited, Special Regulations of the securities and regulatory State Council concerning authorities and 73–6 Floating and Listing of Shares SFC investigation powers and 68 Overseas by 24, 64 Responsibilities and, in Financial red-chip 24–5, 26 Supervision and Regulation shell 24, 25, 26 among the CBRC, the CSRC see also enterprises; listed and the CIRC, Memorandum companies of Understanding on Division Companies Ordinance (Hong Kong) of 57 94, 107 corporate governance company law CCP Committee role in 103–5 Interpretations 93 defined 81 reform see corporate law reform evolutionary model and 3–4

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good, efficiency and 224–5 differential pricing and 226 H-share market role in 8 Dongfang management changes and HKEx standards 224–5 199 HKEx system 222 financial disclosure and 109, 110, implementation difficulties, listed 111 companies 82 independent directors and qualified practice and reform, political personnel and 95, 96, 97, 99 burdens for 240–41 insider control and 82 strategic partnerships improving IPO approval in mainland China, 235–6 standards and procedures for see also internal governance 60–66 structures ownership structure changes and Corporate Governance Guidelines 114, 117, 118, 122, 125 84–5, 98, 99 POR Committee 61, 62, 63 corporate law reform regulatory system nature and 5 convergence in 1–9 role and powers 56–60 regionalism in 1–9, 13–16 securities market evolution and 37, transplantation in 1–9, 10–13 38–9, 40, 42 see also company law selection and flotation of first batch corporatization of H-share companies 29, 32, 34 efficiency and 222 Separation Circular 123 privatization contrasted 81–2 SFC investigation powers compared courts 68 Guangdong Provincial High People’s shareholder meetings and 84–5 171–2 shareholder rights and 90 Haerbin Intermediate People’s 89 Takeover Code and 226, 227, 229 Market Misconduct Tribunal (Hong takeover offers and 228 Kong) 68 see also regulation People’s, shareholder rights and 94 CSSC (China State Shipbuilding Securities and Futures Appeals Corporation) 162, 163, 164, Tribunal (Hong Kong) 68 165–6, 168 Supreme Peoples’ 89–90, 93 CSTIND (Commission of Science CPC (China Petrochemical Technology and Industry for Corporation) 153, 154, 155, 159 National Defence) 164, 174 criminal actions culture, regionalism and 15 CSRC role and powers and 60 Customs Statistics 23 misrepresentation and 90 SFC and 67, 68 Daqing Lianyi Petrochemical see also civil remedies Shareholding Co 89 CSRC (China Securities Regulatory debt, triangular see triangular debt Commission) decentralization Buyback Procedures 127 economic functions, regionalism and capital flight to Hong Kong and 13, 14–15 26–7 fiscal, regionalism and 13–14 committee system for boards of definitions directors and 100 A-shares 53 Controlling Shareholder Circular B-shares 54 126, 127 connected transaction 110 cross-border cooperation and continued connected transactions 86 dispute resolution and 73, 74–5 corporate governance 81

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disclosable transaction 110 growth, open door policy and 14 financial reporting community 224 market-oriented and market- H-share enterprises 2 determined, regionalism and H-shares 56 development of 13 insider system 233 efficiency market 224 accounting standards 224 misrepresentation 89 corporatization and 222 triangular debt 144 good corporate governance 224–5 Deng Xiaoping 22, 25, 26, 81 liquidity and 222–3 derivative lawsuits, shareholder rights reporting transparency 224 and 92, 93 takeover rules 225–30 DFEC (China Dongfang Electric enforcement see civil remedies; Corporation) 195, 196 criminal actions DFEW (Dongfang Electrical Enterprise Bankruptcy Law 172 Machinery Works) 195–6, 198, 199 enterprises Dignam, Alan 233, 237 Mainland, Listed in Hong Kong, direct lawsuits, shareholder rights and Memorandum of Regulatory 92, 93 Co-operation on Regulation of directors, internal governance 23, 28 structures and 83–4, 94–101 Overseas, Suspension of the see also boards of directors; Purchase of, and Further independent directors Strengthening the disclosure see financial disclosure; Administration of Overseas information disclosure Investment, Notice on 26, 27 dispute resolution, securities and see also companies; SOEs regulatory authorities and 73–6 equity market, state presence in 2 diversification, Guangzhou Shipyard see also market 167–70 EU (European Union) Dongfang Electrical Machinery ‘legal origin’ hypothesis and 239 Company Limited stabilization in 30 1994 Annual Report 242–3 evolutionary model, corporate 2000 Annual Report 244–5 governance and 3–4 2005 Annual Report 246–7 see also models case study 138–9, 199–201 Eximbank (Export-Import Bank of listing 7, 195–7 China) 169, 170 management changes 198–9 expansion, Guangzhou Shipyard 167–70 performance 197–8, 257 CCP corporate governance role and family analogy 105 convergence and 12 IPO 34, 37, 38 regionalism and 12–13 Kunming management changes and Ferguson, Michael J. 111–12, 224, 225, 190 238 share-ownership system reform and financial disclosure, new accounting 128 standards improving quality of Dongfang Electrical Machinery Works 106–13 see DFEW see also information disclosure financial supervision and regulation see economy regulation functions decentralization, Foreign Investment Industrial Guidance regionalism and 13, 14–15 Catalogue 120, 121

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Foshan Chemical Fibre Complex 153 Guandong International Trust and Framework Agreement (Guangzhou Investment Corporation see Shipyard/CSSC) 165–6 GITIC future Guandong Overseas Trust and Shanghai Petrochemical 159–61 Investment Company see GOTIC Yizheng 159–61 Guangzhou Economic and Technology Development Zone International GAAP (Generally Accepted Trust and Investment Company Accounting Principles) 107, 108, see GETDZITIC 111 Guangzhou Foreign Economic and see also accounting Trade Trust and Investment Galanis, Michael 233, 237 Company see GFETTIC GEM (Growth Enterprise Market) Guangzhou Shipyard International (Hong Kong) 56, 64 Company Limited (GSI) see also market 1994 Annual Report 242–3 Germany 2000 Annual Report 244–5 corporate governance theory 9–10 2005 Annual Report 246–7 insider systems 233 case study 138–9, 199–201 supervisory committees 102 expansion and diversification GETDZITIC (Guangzhou Economic 167–70 and Technology Development GITIC bankruptcy impact 170–75 Zone International Trust and group structure and related party Investment Company) 172, 173, transactions significance 174, 175 163–6 GFETTIC (Guangzhou Foreign issue 7, 162–3 Economic and Trade Trust and management changes 166–7 Investment Company) 172, 173, performance 251 174 Dongfang performance and 197 Gillespie, John 11 IPO 31, 36, 37 GITIC (Guandong International Trust ongoing communication and regular and Investment Corporation) reporting requirements and 108 bankruptcy SASAC control of 87 Guangzhou Shipyard, impact on shareholder meetings and 87–8 170–75 supervisory committees and 103 Maanshan and 184 Guizhou Tyre Company 122 HKEx exploitation before 1990 and Guo, Bingna 92 25 GITIC Enterprises 25 Hainan Kaili Central Development & globalization Construction 63 convergence and 10 Havens Steel Company (USA) 167, 168 petrochemical industry Hebei Dixian Knitwear 55 reorganization and 157 Hebei Jinniu Energy Resources Goodman, David S.G. 13, 14, 15 Company 125 GOTIC (Guandong Overseas Trust HKEx (Hong Kong Exchanges and and Investment Company) 173, Clearing Limited/Hong Kong 174 Stock Exchange) group structure see management Beiren and 7, 175–6 structure Chinese H-share market Guangdong Enterprises (Holdings) development and 32, 34, 35 Limited 25 corporate governance system 222

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cross-border cooperation and H-share market development and dispute resolution and 73–4, 75 30, 33 CSRC role and powers and 59 HKEx aims 70 Dongfang and 7, 34, 195, 196 independent directors and qualified exploitation before 1990 by PRC personnel and 96, 98–9 24–7 insider control and 83 financial disclosure and 107–8 , management structure requirements 109–10, 112 and 161 Guangzhou Shipyard and 7, 17, Mandatory Provisions required and 64–5, 163 supplemented by 24 H-share dual listing and 56 petrochemical industry H-share enterprises definition and 2 reorganization and 159 H-share listing applications, SFC and 68–70 screening by 70–73 shareholder meetings and 86–7 independent directors and 96 shareholder rights and 88 IPO approval and, standards and HKICPA (Hong Kong Institute of procedures for 62, 64 Certified Public Accountants) 107, Kunming listed on 7, 186 108 listing requirements see HKEx HKICS (Hong Kong Institute of Listing Rules; listing Company Secretaries) 98 requirements HKSCC Nominees Limited 155, 185, Maanshan listing on 7, 181 192 regulatory control and 5 Hong Kong role, structure and powers 66–70 B-shares and 55 securities market evolution and 34–5 financial disclosure and 112 Shanghain Petrochemical and 7, 28, GEM 56, 64 150 insider and outsider systems and 233 share prices on, corporate integration with mainland PRC 22–4 governance standards reflected ‘legal origin’ hypothesis and 239 in 224–5 legal system, PRC compared 2 Sinopec Corp listing on 154–5 PRC’s ‘open door’ policy and 14 Tianjin Bohai listing on 7, 192 reform initiatives 234 Tsingtao and 7, 28, 139 regulatory control and 5–6 voluntary disclosure by H-share stabilization illegal in 30 firms listed on 238 see also SFC voluntary disclosure by SOEs listed on 111–12 Independent Director Guidelines 95–6, Yizheng listing on 7, 32, 151–2 97, 98, 102 HKEx Listing Rules independent directors, management company secretary and 98 role of qualified personnel and committee system for boards of 94–9 directors and 99 see also directors cross-border cooperation and Indonesia, Kunming and 187 dispute resolution and 74, 75–6 information disclosure financial disclosure and 107, 109, Shanghai Petrochemical and 33, 34 110 voluntary, by H-share firms listed on Guangzhou Shipyard structure and HKEx 224, 238 165 voluntary, by SOEs listed on HKEx H-share listing applications 111–12 screening and 70–73 see also financial disclosure

Alice de Jonge - 9781848442788 Downloaded from Elgar Online at 09/28/2021 02:08:22AM via free access 304 Corporate governance and China’s H-share market insider control model, corporate Yizheng 31–2, 37 organization 82 see also listing; shares see also models IPO Measures 39, 40 insider system issue see listing blockholder control and 237–8 outsider system and 233, 234–5, Japan 236–7 corporate governance theory 9, 10 insider trading, shareholder rights and Guangzhou Shipyard and 170 92 insider systems 233 interest see conflict of interest; public Jardine Fleming 33, 142–3 interest Jellmont SA (France) 197, 198 internal governance structures Nandasoft Company Limited directors 83–4, 94–101 56 financial disclosure 106–13 Jiaoda Kunji High Tech Co Ltd insider control 81–3 (formerly Kunming Machine Tool managers 83–4, 103–5 Company Limited) 187, 188, 189, ownership structure changes 113–15 190, 191, 235 institutional investors 115–18 Jiaotong Group (Xian Jiaotong share-ownership system reform University Industrial (Group) 122–8 Incorporated) 187, 188, 189, 190, significant foreign investor 191 involvement 118–22 Jilin Chemical 59 shareholders 83–4 joint actions, shareholder rights and meeting 84–8 90, 93–4 rights 88–94 Joint Investment Co 21 supervisors 83–4, 101–3 see also corporate governance Kahn-Freund, Otto 11 investors KMT Plant 186 institutional investors, restructuring see also Kunming Machine Tool and 115–18 Company Limited significant foreign, ownership KPMG Huazhen Accounting 172 structure changes involvement Kun Ji 186, 190, 191 118–22 see also Kunming Machine Tool QFII scheme 118–19, 120, 121 Company Limited IPO (initial public offering) Kunji Jiaoda see Jiaoda Kunji High Beiren 31, 36–7 Tech Co Ltd CSRC role and powers and 57, Kunming Jinghua Company 187, 191 60–66 Kunming Machine Tool Company Dongfang 34, 37, 38 Limited (later Jiaoda Kunji High Guangzhou Shipyard 31, 36, 37 Tech Co Ltd) lock-up requirement 42 1994 Annual Report 242–3 price determination 29, 40–41 2000 Annual Report 244–5 price divergence, listing difficulties 2005 Annual Report 246–7 with 35–6, 39 blockholder control and 237 securities market evolution and 34–5 case study 138–9, 199–201 Shanghai Petrochemical 28, 29, listing 7, 31, 186–7 30–31, 36 management changes 190–91 Tianjin 32–3, 38 performance 187, 254 timing 138 restructuring 187–90 Tsingtao 28 financial disclosure and 108

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policy objectives coinciding and 240 Regulatory Opinion on takeover rules and 225 Standardizing 84 Tianjin management structure Standards for Governance of 185 changes and 194 Stock Incentives in, Administrative Measures on 100 La Porta, 236, 237, 238 Stock Right Allocation Reform Lam, Kevin C.K. 111–12, 224, 225, 238 Method, Administration of 125 Law Debenture Trust (Asia) Limited Suspending and Terminating the 147 Listings of, Implementing ‘law matters’ thesis 236–7 Procedures 64 Lee, Grace Meina 111–12, 224, 225, see also companies 238 listing ‘legal origin’ hypothesis 238–9 applications, screening by HKEx legal system 70–73 Hong Kong and PRC compared 2 back-door 24, 25, 26 transplant effect 10–13 difficulties, IPO price divergence and Li Guirong 146 35–6 Lianhua Supermarket 64, 98 Dongfang 195–7 Lin, Z. Jun 16 Foreign Investment Shares Inside liquidity China by a Shareholding efficiency and 222–3, 230 Company, of, Provisions on 55 takeovers and 225–6 Guangzhou Shipyard 162–3 listed companies Kunming 31, 186–7 corporate governance Maanshan 7, 31 implementation difficulties 82 requirements see listing requirements CRSC role and powers and 57 Shanghai Petrochemical 150–52 Independent Director System, Tianjin 191–2 Guiding Opinions on the Tsingtao 4, 7, 139–40 Establishment of 185 Yizheng 150–52 Outside China, Further see also IPO Standardizing Operations and Listing Code 33–4, 39 Reform of, Opinion 82–3 listing requirements Overseas, Notice on the additional 71–3 Implementation of Essential cross-border cooperation and Clauses in Articles of dispute resolution and 73 Association of 24 normal see HKEX Listing Rules Pilot Reform Projects Regarding see also requirements Separation of Equity Listing Rules see HKEx Listing Rules; Ownership and Trading Rights Shanghai Stock Exchange, Listing of, Operational Guidelines 125 Rules; Shenzen Stock Exchange, Reform Regarding the Separation of Listing Rules Equity Ownership and Trading loss, calculation of, shareholder rights Rights of State-Controlled, and 91 Guiding Opinion 127 ‘lottery ticket method’, share allocation Regulation of Cash Flows Between 36–7 Their Affiliates and, and Low, Chee Keong 68 Security Provided to Outside Parties by, Several Issues M&A (mergers and acquisitions) Concerning, Circular 110–11 Provisions 121–2, 227 Shareholders’ General Meetings, takeover rules and 226

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Maanshan Iron & Steel Company integrity in financial disclosure, role Limited in maintaining 112–13 1994 Annual Report 242–3 intermediaries, CSRC role and 2000 Annual Report 244–5 powers and 57 2005 Annual Report 246–7 open, HKEx listing requirements case study 138–9, 180–81, 199–201 and 71 management changes 184–5 see also equity market; securities performance 181–4, 253 market; share market listing 7, 31 market economy, development of, Macau, B-shares and 55 regionalism and 13 management Market Misconduct Tribunal (Hong accountability to minority Kong) 68 shareholders, H-share see also courts enterprises and 82–3 meetings, shareholder 84–8 Beiren 178–9 Merrill Lynch 30 economic, regionalism and Ministry of Commerce 121 decentralization of 13 Ministry of Communications 170 Guangzhou Shipyard 163–6 Ministry of Finance 28, 106, 118, 123, role of independent directors and 170, 189 qualified personnel 94–9 Ministry of Foreign Trade and State-Owned Assets in Qingdao Economic Cooperation see Municipality, of, Measures for MOFTEC Delegation of 142 Ministry of Metallurgic Industries 180, see also boards of directors; 182 restructuring; supervisory Ministry of Public Security 59 committees misrepresentation, shareholder rights management changes and 89–91 Dongfang 198–9 Mitsubishi Heavy Industries Ltd 180 Guangzhou Shipyard 166–7 Moakes, Nick 112 Kunming 190–91 models Maanshan 184–5 evolutionary, corporate governance Shanghai Petrochemical 161–2 and 3–4 Tianjin 194–5 insider control, of corporate Tsingtao 147–9 organization 82 Yizheng 161–2 ‘principal–agent’, insider control and managers 81 internal governance structures and MOFTEC (Ministry of Foreign Trade 83–4, 103–5 and Economic Cooperation) 25 stock options and 100–101 Montesquieu, Charles-Louis de Mandatory Provisions 23–4, 28, 82, Secondat, Baron de la Brède et de 94–5, 101 10–11 market Multifibre Agreement (WTO) 161 capitalization, HKEx listing Myanmar see Burma requirements and 71 defined 224 National Development and Reform efficiency see efficiency Commission 183 Growth Enterprise (GEM) (Hong Neoh, Anthony 60 Kong) 56, 64 New York Stock Exchange 56, 150, 161 H-share, role in corporate see also USA governance 8 Nolan, P. 141, 157

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Nomura International (Hong Kong) price, Shanghai-traded A-shares and 34 Hong Kong-traded H shares compared 35 obligations Shanghai Petrochemical 152–3, 250 balance of powers and, in securities SOE, privatization and improvement market 2 of 222 contractual, listing requirements and Tianjin 192, 256 70–73 Tsingtao 140–45, 251 OECD (Organization for Economic Yizheng 152–3, 255 Co-operation and Development) PetroChina (China National Petroleum 81 Corporation) 153, 154, 155, 156, offences see civil remedies; criminal 157, 159 actions policy objectives, tensions between Offering and Underwriting Measures central and regional 239–40 40 POR (Public Offering Review) offerings Committee of the CSRC 61, 62 Follow-on, Measures 42–3 Measures 63 public see IPO; POR powers outsider system balance of obligations and, in failures, solutions to 235 securities market 2 insider system and 233, 234–5, 236–7 CSRC 56–60 regulatory system and 6 HKEx 66–70 shareholder protection and 237–8 SFC 66–70 ownership supervisory committee 101 changes see restructuring price state influence 138–9 determination, IPO 29, 40–41 divergence, IPO, listing difficulties partnerships with 35–6, 39 Closer Economic, Arrangement performance, Shanghai-traded A- (CEPA) 23, 24 shares and Hong Kong-traded strategic, improving corporate H shares compared 35 governance and 235–6 sensitive information, financial Party see CCP disclosure and 109–10 PBoC (People’s Bank of China) share, corporate governance Dongfang and 197 standards and 224–5 economic reconstruction and 21 Price Waterhouse Coopers 173–4 GITIC bankruptcy and 171, 172 ‘principal–agent’ model, insider control Guangzhong Shipyard and 169 and 81 ownership structure changes and see also models 116, 118, 119 privatization supervision of Maanshan by 184 corporatization contrasted 81–2 penalties see civil remedies; criminal SOE performance improvement and actions 222 Peregrine Capital 30, 33 Process Review Panel (Hong Kong) 68 performance profit test, HKEx listing requirements Beiren 179–80 and 71 Dongfang 197–8, 257 public interest, HKEx listing Guangzhou Shipyard 251 requirements and 71 Kunming 187, 254 public offering see IPO; POR Maanshan 181–4, 253 Puxty, Anthony G. 113, 224

Alice de Jonge - 9781848442788 Downloaded from Elgar Online at 09/28/2021 02:08:22AM via free access 308 Corporate governance and China’s H-share market qualifications, independent directors’ share-ownership system reform 97–8 122–8 QFII (Qualified Foreign Institutional significant foreign investor Investor) scheme 118–19, 120, 121 involvement 118–22 see also investors Kunming 187–90 Qingdao State-owned Assets Bureau Shanghai Petrochemical 153–9 140, 142, 147, 148, 149 Tianjin 192–4 see also SASAC Tsingtao 145–7 Qualified Foreign Institutional Yizheng 153–9 Investor see QFII see also management rights, shareholder 88–94 rationalization, SOEs 140–41 Roe, Mark J. 233, 234, 240 Red Chip Notice 26–7 rules regionalism Listing see HKEx Listing Rules; corporate law reform, in 1–9, 13–16 Shanghai Stock Exchange, family analogy and 12–13 Listing Rules questions arising 9 takeover, efficiency and 225–30 securities market growth and 21–2 Ruskola, Teema 11, 12 state influence and 8 regulation SAFE 119, 120 authorities, cross-border Salomon Brothers 140 cooperation and dispute Sany Heavy Industry 125 resolution 73–6 SASAC (State-owned Assets framework, B-shares 55 Supervision and Administration reform, insider and outsider system Commission) convergence and 234–5, 236 Beiren share capital structure and 177 see also CSRC; HKEx; SFC capital flight to Hong Kong and 27 regulatory system financial disclosure and 110, 113 centre and region in 13–16 Guangzhou Shipyard and 87, 164 dispersed and disparate nature of Kunming restructuring and 188 5–6 ownership structure changes and personal relationships pervading 6 123, 127 remedies see civil remedies petrochemical industry reporting reorganization and 154 regular, requirement for, financial Shanghai Petrochemical and 87 disclosure and 108–9 share market overview and 53–4 transparency, efficiency and 224 shareholder meetings and 87 requirements Yizheng issue and 151 lock-up, IPO and 42 see also State Council management structure, HKEx SBPCI (State Bureau of Petroleum and Listing Rules and 161 Chemical Industry) 154 ongoing communication, financial securities authorities, cross-border disclosure and 108–11 cooperation and dispute regular reporting, financial resolution 73–6 disclosure and 108–9 see also CSRC; HKEx; SFC see also listing requirements Securities Commission (Hong Kong) restructuring see SFC internal governance structures and Securities and Futures Appeals 113–15 Tribunal (Hong Kong) 68 institutional investors 115–18 see also courts

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Securities and Futures Ordinance Separation Circular 123–5 (Hong Kong) 67–8, 83 SETC (State Economic and Trade Securities Investment Funds, Interim Commission) 82, 95, 118, 154 Measures on the Administration SFC (Securities and Futures of 115 Commission) (Hong Kong) 5, 24, Securities Law 1998 30–31, 59, 66–70, 73, 74 CSRC role and powers and 57 SG Warburg 32, 33, 112, 140 IPO approval and, standards and Shanghai Feiyue Hi-fi Corp 21 procedures for 61, 64 Shanghai Fudan Microelectronics 64 securities market evolution and 39, Shanghai Petrochemical Company 40, 41 Limited shareholder rights and 89, 90 1994 Annual Report 242–3 Securities Law 2006 2000 Annual Report 244–5 committee system for boards of 2005 Annual Report 246–7 directors and 100 case study 138–9, 149–50, 199–201 cross-border cooperation and future 159–61 dispute resolution and 74 industrial reorganization 153–9 CSRC role and powers and 57–9 issue 7, 150–52 financial disclosure and 106, 110, management changes 161–2 113 performance 152–3, 250 insider control and 83 CCP role in corporate governance IPO approval and, standards and and 105 procedures for 62, 63–4 financial disclosure and 108 IPO price determination and information disclosure and 33, 34 underwriting agreements and IPO 28, 29, 30–31, 36 41 ownership structure changes and 129 Offering and Underwriting SASAC control of 87 Measures and 40 Shanghai Securities Exchange 37 ownership structure changes and 121 Shanghai Securities News 113 shareholder rights and 91, 92, 93 Shanghai Stock Exchange takeover rules and 226, 228 A-shares and 54 securities market B-shares and 55 balance of powers and obligations in Beiren listing on 177 2 Dongfang and 38, 196, 197 growth, regionalism and 21–2 Guangzhou Shipyard listing on 163 mainland evolution 34–43 IPO approval and, standards and Misrepresentation in procedures for 63 Acceptance of Civil Tort Dispute Listing Rules 39, 41–2 Cases Arising from, Maanshan listing on 181 Questions Concerning, ownership structure changes and Circular 89 123, 124–5 Trial of Civil Damages Cases securities market growth and 22 Arising from, Several Shanghai Petrochemical and 36, 150 Provisions 89–91, 94 Tianjin Bohai and 38, 192 see also market Tsingtao listing on 140 Securities Ordinance (Hong Kong) Shanghai Zi Jiang Enterprise Group 30 125 Segal, Gerald 13 share market SEG International Trust and cross-border, creation and Investment Corporation 184 development 21–4

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companies, selection and flotation Shenyang Group (Shenyang Machine of first batch 27–34 Tool (Group) Company Limited) HKEx, Chinese exploitation of 189, 190, 191 24–7 Shenzen Leasing Co. Ltd. 184 overview, securities and regulatory Shenzen Stock Exchange authorities and 53–6 A-shares and 54 see also market B-shares and 55 shareholders CSRC role and powers and 60, 63 Beiren 176–7 Listing Rules 39, 41–2 blockholder control, insider system ownership structure changes and and 237–8 123, 125 Controlling, Circular 126, 127, 128, Shanghai Petrochemical IPO and 36 229 securities market growth and 22 internal governance structures and Tianjin IPO and 38 83–4 Siemens (Germany) 197 meeting 84–8 Singapore, H-share dual listing and 56 rights 88–94 Sinopec Corp (China Petroleum Majority, Increase Rules 127 Corporation) management accountability to, H- petrochemical industry future and share enterprises and 82–3 159, 160 protection of, outsider system and petrochemical industry 237–8 reorganization and 153, 154–5, Public, Protection of, Provisions 85 156, 157 shares Shanghai Petrochemical controlled Administration of the Issuing and by 150 Trading of, Tentative Shanghai Petrochemical issue and Regulations 22 151 buyback plans, Tsingtao and 145–6 Yizheng controlled by 150 capital structure, Beiren 176–7 Yizheng management structure legal-person 54, 118 changes and 162 liquidity, efficiency and 222–3 Smyth, Russell 155, 156 ‘lottery ticket method’ of allocation SOCBs (State Owned Commercial 36–7 Banks) 116, 118 Methods of Issuing, Circular on SOEs (state-owned enterprises) Further Improving 39 capital flight to Hong Kong and 27 Non-Floating, Operational CCP role in corporate governance Guidelines on the Reform of and 104, 105 125 economic reconstruction and 21 market overview 53–6 H-shares and 56 Over-placement Option, Tentative HKEx-listed, voluntary disclosure Opinion for 34 by 111–12 Overseas Issue and Listing of by independent directors and qualified Overseas Companies, Issues personnel and 97 Relevant to 27 IPO approval and, standards and ownership system reform 122–8 procedures for 60–61 price of, corporate governance managament structure changes and standards and 224–5 194 social, A-shares 54 managers and stock options and 101 state-owned 54, 118 ownership structure changes and see also IPO; POR 114, 118–22

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performance improvement, Shanghai Petrochemical 157–8 privatization and 222 Tsingtao 149 rationalization 140–41 Yizheng 157, 158 regionalism and 2, 4 regionalism and 5 share market overview and 53, 54 shareholding, A-shares 54 see also companies; enterprises see also CCP South Korea State Auditing Administration 113 Guangzhou Shipyard and 170 State Bureau of Petroleum and PRC’s ‘open door’ policy and 14 Chemical Industry see SBPCI Shanghai Petrochemical and State Council Yizheng performance B-shares regulatory framework and subsequent to listing and 152 55 Special Assessment Guidelines 64 capital flight to Hong Kong and Spin-off Circular 64–5 26–7 sponsor, additional listing cross-border share market requirements and 71–3 development and 22, 24 SSRC 123 financial disclosure and 110 stabilization, Shanghai Petrochem IPO Guangzhou Shipyard and 170 and 30–31 HKEx exploitation before 1990 and standards 25 accounting, efficiency and 224 ownership structure changes and Business Enterprises, for (ASBE) 122, 123 106, 111 petrochemical industry CSRC procedures and, for IPO reorganization and 153, 154 approval in mainland China Reduction of State Holdings 60–66 Tentative Procedures 122 Governance of Listed Companies, regulatory control role taken over by for 185 CSRC 56–7 HKEx, corporate governance and selection and flotation of first batch 224–5 of H-share companies 27, 28 new accounting, improving quality Yizheng management structure of financial disclosure 106–13 changes and 162 state see also SASAC accounting regulation and 224 State Economic and Trade CCP role in corporate governance Commission see SETC and 103 State Electrical and Mechanical equity market presence 2 Department 177 Holdings, Reduction of, Tentative State Planning Commission 61 Procedures 122–3 State Restructuring Commission 24 integrity in financial disclosure, role State Science Technology Commission in maintaining 112–13 188–9 interests represented in listed State Tax Bureau 153, 170 Chinese firms 6–7 State-owned Assets Supervision and ownership structure changes and Administration Commission see 113–14 SASAC pervasive influence of 7–8, 138–9, State-owned Commercial Banks see 200–201 SOCBs Beiren 180 Steinfeld, Edward 181–2, 222 Maanshan 182–3 Strategic Investment Measures 43, 122, Kunming 189 227, 236

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Strategic Investor Circular 120–21, 227 Tianjin Huaze (Group) Co. Ltd. 193 strategic partnerships, improving Tianjin Municipal Investment corporate governance and 235–6 Company Limited see TMICL suitability, HKEx listing requirements Tianjin Sewage Company 193 and 70 Tianjin Trust and Investment supervisors, internal governance Corporation 194 structures and 83–4, 101–3 Tianjin Urban Road & Bridge supervisory committees Construction Company 193–4 Beiren 178 timing, IPO 138 Dongfang 198, 199 TMICL (Tianjin Municipal Kunming 190–91 Investment Company Limited) Maanshan 184, 185 193, 194, 195 state influence on 139 see also Tianjin Bohai Chemical Tianjin Bohai 194–5 Industry (Group) Company Tsingtao 148, 149 Tong Ren Tang Technologies 64 see also committees; management trading, insider see insider trading trading record, HKEx listing Taiwan requirements and 70 B-shares and 55 training, independent directors’ 97 Shanghai Petrochemical and transactions Yizheng performance connected, Shangahi Petrochemical subsequent to listing and 152 and Yizheng and 158–9 Takeover Code 121, 226, 227–30 connected and other notifiable, takeover rules, efficiency and 225–30 financial disclosure and 110–11 Tan Yangzhong Realty Co 21 continued connected, defined 86 Textile Council 151 notifiable, financial disclosure and Thailand 107 Kunming and 187 related party, significance of, PRC’s ‘open door’ policy and 14 Guangzhou Shipyard 163–6 Thatcher, Margaret 22 transparency, reporting, efficiency and Tianjin Bohai Chemical Industry 224 (Group) Company Limited (later transplantation, corporate law reform, Tianjin CEP) in 1–9, 10–13 1994 Annual Report 242–3 triangular debt, Tsingtao and 144 2000 Annual Report 244–5 tribunals see courts 2005 Annual Report 246–7 Tsinghua Tongfang 125 blockholder control and 237 Tsingtao Bewery Company Limited case study 138–9, 199–201 1994 Annual Report 242–3 listing 7, 191–2 2000 Annual Report 244–5 management changes 194–5 2005 Annual Report 246–7 performance 192, 256 case study 138–9, 199–201 restructuring 192–4 listing 4, 7, 139–40 IPO 32–3, 37, 38 management changes 147–9 takeover rules and 225 ownership changes 145–7 Tianjin CEP (Tianjin Capital performance 140–45, 249 Environmental Protection IPO 28, 31 Company Limited, formerly Kunming listing and 186 Tianjin Bohai Chemical Industry ownership structure changes and 120 (Group) Company) 113, 193, 194, remuneration committee 99–100 195, 235 strategic partnerships 235–6

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Tsingtao Brewery Xian Company Western Europe see EU Limited 143 World Bank 58, 81, 97, 106, 114, 223 Turkic republics (former USSR), WTO (World Trade Organization) 14, PRC’s ‘open door’ policy and 156, 157, 161 14 Xi, Chao 53, 104, 105 UK (United Kingdom) Xian Hans Brewery and Beverage financial disclosure and 107 Factory 143 H-share dual listing and 56 xianchang jiancha, role and powers and ‘legal origin’ hypothesis and 238 59 outsider system and 235, 237–8 reform initiatives 234 Yizheng Chemical Fibre Company regulatory reform 6 Limited stabilization in 30 1994 Annual Report 242–3 USA (United States of America) 2000 Annual Report 244–5 Chinese H-share Market 2005 Annual Report 246–7 development and 28 case study 138–9, 149–50, 199–201 corporate governance theory 10, future 159–61 12 industrial reorganization 153–9 financial disclosure and 112 issue 7, 150–52 Glass–Steagall reforms 115 management changes 161–2 independent directors and 97 performance 152–3, 255 ‘legal origin’ hypothesis and 238 IPO 31–2, 37 New York Stock Exchange 56, 150, ownership structure changes and 128 161 Yuan Lu 146 outsider system and 235, 237–8 Yunnan State-owned Assets Operation political burdens 240 Company Limited 191 reform initiatives 234 see also SASAC regulatory reform 6 Sarbanes-Oxley Act 10 Zhai Qingguo 155, 156 stabilization in 30 Zhen Ping Hao 224 zhuada Vincent Leader 162 CCP and, 141 voluntary disclosure see information petrochemical industry disclosure, voluntary reorganization and 153

Alice de Jonge - 9781848442788 Downloaded from Elgar Online at 09/28/2021 02:08:22AM via free access Alice de Jonge - 9781848442788 Downloaded from Elgar Online at 09/28/2021 02:08:22AM via free access