Law on State-owned assets by year-end

04/02/2003
China Daily

Drafting of the State-owned Assets Law, after several amendments, is complete and the new law is expected to be promulgated by the year-end, said Liu Yishun, director of the drafting panel under the Financial and Economic Committee of the National People's Congress (NPC).

As a government department, the newly-established State Assets Management Commission (SAMC) will supervise and administer State-owned enterprises (SOEs) instead of being involved in direct management and business, according to the draft.

Separately, there will be special State-asset management institutions or companies in charge of decision-making on investment, management and business, but they have no administrative power.

The institutions are of two kinds, special legal persons or special sectors.

The former includes special large State-owned enterprise groups, State-owned investment and management companies, or State-owned share-controlling companies.

The latter includes monopolized sectors such as China Post, the military industry, as well as some State financial institutions, said the draft.

Moreover, State-asset management companies at all levels will be given some special rights:

They can make investments equal to or even exceeding 50 per cent of their net assets, while the current Corporation Law limits that level to below 50 per cent.

Their income from stock ownership is exempted from repeat income tax if holding State enterprises have paid related taxes.

Their legal profits can be reinvested into further development instead of surrendering them to the State treasury.

They can issue stocks and bonds on the strength of their net assets as long as the actions are in accordance with the law.

The draft also contains detailed rules on fighting corruption to safeguard assets worth as much as 10 trillion yuan (US$1.2 trillion).

People's congresses at all levels should have strict supervisory control over State-asset management institutions.

Governments should report to people's congresses periodically on State assets' use and management; and people's congresses can ask special audit companies to check on management of State assets.