China is planning to set up a lawsuit mechanism efficient and convenient for capital market investors to seek compensation from listed companies for financial wrongdoing, according to China's top securities official.
Addressing a seminar on capital markets and corporate governance which concluded Thursday, Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), said the mechanism aims to ensure, through the power of law, that participants of the market are honest and responsible.
Shang said China will continue to improve its supervision over listed companies, and strive to enable listed firms to strengthen their corporate governance systems and protect the legitimate rights of public investors while making the capital market a more valuable investment channel.
China's fledging stock markets have remained bearish during the past two years despite the fast growth of the country's economy for the past two decades, which stood at a little over 9 percent annually.
As a result, public investors have lost heavily during the past two years, while most of the listed companies have profited, leaving investors pessimistic about the markets' prospects despite central authorities' efforts to reinvigorate them.
China introduced two regulations aimed to bolster its sluggish capital market last month by making it easier for securities firms to raise money from the market, while ordering the takeover of a troubled securities firm.
Chinese securities firms have suffered heavy financial losses from falling stock prices since 2000. Total losses have been estimated at 220 billion yuan (US$26.8 billion).
"Our goal is to have China's capital markets develop in a healthy way along with the country's economic reform and expansion, " Shang said.
He said securities regulators at all levels will facilitate basic institution-building to improve supervision over corporate governance and information disclosure to make sure all information published is "accurate, complete and timely."
Shang said he expects market competition and efforts to cultivate credibility of investors and listed companies will help punish and eliminate dishonest institutional and individual investors.
China's ongoing reforms, including the restructuring of its State-owned firms, financial reform and social security reform, are and will help create sound conditions for sustained and healthy development of the capital market, he said.
China will continue to attach importance to the role of the capital market in collecting capital resources, optimizing reallocation of resources, creating wealth for investors and improving corporate governance of listed firms, he said.
(Xinhua News Agency December 5, 2004)
