As anyone who spends time doing business in China knows, corporate governance is a major issue in China. With billions of foreign funds invested in Chinese companies, and many Chinese issuers listed on stock exchanges outside of China, tools that will enable minority shareholders, creditors and others to combat basic abuses in Chinese companies are important to the foreign investment community as well as financial institutions. China’s highest court, the Supreme People’s Court (SPC), is working on this issue, through its power to issue quasi-legislation, called judicial interpretations.
It has recently issued a draft judicial interpretation on corporate governance for public consultation.
The interpretation will give more rights to stakeholders, including shareholders and employees, to challenge abuse by majority holders, give them access to books and records, give them first right of refusal to purchase shares that become available, and give them clearer rights in filing legal challenges.