Shanghai will encourage utilities and other public services firms, as well as industrial enterprises that are facing fierce competition, to get themselves listed on the stock market as parts of efforts to open up the ownership of state-controlled entities.
The government also plans to help companies to set up special mechanisms for initiatives such as preferential share issues, a media report said.
Shanghai aims to complete the shareholding reform for state firms, which will see companies moving toward a mixed ownership, in the next three to five years, Securities Times reported Tuesday. With a mixed ownership, companies are expected to operate in a more market-driven way and improve their performance.
Utilities and public services firms will remain in overall control of the government, while emerging industries, advanced manufacturing and modern services firms can be opened up to private players. Mergers and acquisitions activities will be encouraged and non-state-owned capital will be welcomed into state-owned enterprises, the report said.
“This means that there will be many companies funded but not owned by the state,” Economic Information cited Li Jin, an analyst from the China Enterprise Development Research Institute, as saying.
The reform will also encourage listed firms to use company shares as bonus instead of cash, according to Economic Information. At present, 70 percent of the companies in Shanghai use cash to motivate staff, the report said.
In 2012, state-owned enterprises in Shanghai accounted for one-ninth of the total assets of companies in the prefectural level city. Li said the route being taken by the Shanghai State-owned Assets Supervision and Administration Commission “will become a role model for other areas”.
In January, Hony Capital (Beijing) Co. Ltd. bought 10 percent stake in Shanghai Chengtou Holding Co Ltd. (600649.CN) for nearly 1.8 billion yuan (US$290 million), in a first of its kind initiative involving a local state firm and a private-equity firm.
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