First round of new regulations to affect 150,000 medium to small-sized SOEs China plans to introduce regulations to curb illegal asset sales as part of efforts to reform moribund state companies. The plans follow heated talks about growing fraud and corruption at state firms at the National People's Congress (NPC) which yesterday closed with Premier Wen Jiabao reiterating the need to improve corporate governance. The first set of regulations will define the size of stake a company's management is allowed to hold. The new rule will affect about 150,000 medium to small sized state-owned enterprises (SOE), according to media reports. Managers will also be banned from buying out assets or using acquired assets as collateral to raise funds or secure loans. State asset losses have become a worry for the central government as investigators have uncovered an increasing number of thefts by SOE bosses in recent years. Procurator-General Jia Chunwang said in his NPC report last week that 10,407 officials were found to have misappropriated or stolen state assets during restructuring programmes last year. The Bank of China and China Construction Bank are investigating thefts of more than one billion yuan by branch officials in the northeastern provinces. Rules to govern state asset sales are needed as Beijing quickens the pace of privatisation. The State-owned Assets Supervision and Administration Commission (Sasac), which controls more than 180 of the country's biggest SOEs with assets worth 9.2 trillion yuan, aims at cutting the number of companies under its control to between 80 and 100, although the eventual goal is to groom 30 to 50 internationally competitive corporations. In a recent interview with China Central Television, Sasac chairman Li Rongrong conceded that China had not been able to prevent asset losses due to the lack of a comprehensive legal framework. Mr Li said a key issue was being able to hold local state-assets bureaus responsible at provincial and city levels. But delegates to the Chinese People's Political Consultative Conference were critical of Sasac, although it was noted that the organisation had only been in existence for less than two years. 'No one person is able to reform all industries and know every one of them, be it civil aviation, telecoms etc,' said Liu Deshu, president of Sinochem, a Sasac-controlled state giant. 'I don't see any new measures in enterprise reforms.'