WHEN Hangzhou Tianmushan Pharmaceutical held its annual general meeting in May, it banned shareholders with less than 10,000 shares from attending. The listed company suggested that these small shareholders band together and appoint a representative to attend on their behalf. Yesterday, it took out an advertisement in a Shanghai newspaper to apologise to small shareholders for shutting them out of the meeting. Shanghai Tongji Science and Technological Industries, Shanghai No 9 Department Store and Shanghai Tunnel Project Shareholding made the same mistake earlier and, two days ago, also publicly apologised to small shareholders in the same newspaper. The four companies' directors admitted that by limiting the attendance of small shareholders they failed to carry out their duties and promised that would not happen again in future. The first company to apologise was Shanghai Special-shaped Steel when it bought space in Shanghai Securities News last Saturday. The companies' action had violated the Company Law Clause 106, which says: 'Shareholders attending a shareholders' general meeting shall have the right to one vote for each share held'. Analysts said it was not ignorance of the law that led to the firms' mistakes. Rather, it was because they thought they could get away with it, since the practice of limiting the attendance of small shareholders was widespread among listed companies. 'If you go strictly by the book, probably most listed companies did not abide by the law in their last general meeting,' Chen Xian, a stock analyst, said. A Shanghai No 9 Department Store spokesman said that when directors limited the attendance of small shareholders they were merely carrying out what they thought was an acceptable practice. He said it was troublesome and expensive to allow all shareholders to attend the meeting and too big an attendance would also eat into the company's after-tax earnings. 'But the China Securities Regulatory Commission (CSRC) told us we were wrong. So we had to take out an advertisement to apologise,' the department store spokesman said. Analysts said it was clear that the CSRC, the securities watchdog, must have exerted pressure on these companies to admit their mistakes. 'These companies held their general meetings in April and May but did not apologise until now. That suggested their admission of errors was a result of pressure from the CSRC,' another analyst said. Mr Chen said he expected more listed companies to pay for newspaper space within the next few weeks to apologise to their small shareholders, as the CSRC tightened the implementation of rules and laws this year. 'The CSRC has said repeatedly this is the year of standardising market practices among listed companies and brokerages.' But other analysts said, noble as CSRC's objective was, it would find it hard to right the wrongs of the industry. Unlike the Securities and Futures Commission in the US, which was staffed by hundreds of well-trained professionals, the CSRC had less than 100 people to monitor the listed companies in Shanghai and Shenzhen. Despite a small staff, the CSRC had taken steps to strengthen its regulatory and supervisory powers over the securities industry. In May, one of its senior officials said the CSRC was undergoing a reorganisation designed to improve its surveillance of the industry. Analysts said the best way to get listed companies to behave was for shareholders to stand up for their rights during the general meetings. 'Unfortunately, most shareholders are not interested in the long-term future of the listed companies. All they want is to make a fast buck,' Gui Haoming, deputy general manager of Tianjin Securities, said. He said companies tended to behave responsibly if there were mature and sophisticated shareholders to fight for their rights. 'It will be a long while before we see a strong pool of sophisticated shareholders,' he said.