(Yicai Global) Feb. 09 – East China's Shandong province has decided to allow minority shareholders of state-owned enterprises (SOE) to nominate directors collectively, in a bid to encourage private investors to buy stakes in such enterprises. Shandong rules private sector and minority holders can now play their part in improving SOEs' governance structure and creating innovative operating mechanisms.
Under the new rule, minority shareholders can now nominate directors of SOEs collectively after a consensus has been reached among all shareholders, state-run Xinhua News Agency reported.
In order to pave the way for minority shareholders to get involved in corporate decision-making, companies are encouraged to set out special provisions regarding the number and composition of board members and the director election process. The minority shareholders may, therefore, be entitled to nominate directors, said an official at the State-Owned Assets Supervision and Administration Commission of Shandong Province. Alternatively, votes cast by minority shareholders may be collectively counted.
SOEs are also encouraged to relax ownership structures and improve their existing equity exit mechanisms by listing or drawing up stock value adjustment agreements or through share repurchase.