LISTED mainland companies will hav to start answering to shareholders if the new company law is implemented as planned tomorrow.
''Now the law clarifies shareholders' rights as they have the ultimate decision-making power. Before, enterprises were answerable only to the state,'' said Linklaters and Pains solicitor and head of China department Judith Crosbie.
Shareholders' power in financial matters are defined to include such basic rights as to examine the minutes of shareholders' meetings as well as financial and accounting reports.
Stake-owners will also have final say in approving budgets, accounts, profit distribution plans and plans for recovery of losses.
They are to decide on issues such as merger, division, dissolution and liquidation of the company. The issuing of bonds and any increases or reductions in the company's registered capital is subject to shareholder approval.
But the law is still vague in many ways. While the content of financial reports is set out, no detailed financial disclosure is required.
Terms such as ''serious illegal act'', regarding suspension, are open to interpretation. Audits are a must, but the credentials of auditors are not specified.