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Economy

MOF publishes regulation to curb blind purchasing by SOEs on global markets

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2017-08-03 09:56Global Times Editor: Li Yan ECNS App Download

The Ministry of Finance (MOF) recently published a financial management regulation for overseas investment by State-owned enterprises (SOEs), effective starting from Tuesday.

The regulation aims to curb SOEs' blind decisions on investment in global markets, said a statement posted on the ministry's website Wednesday.

The regulation first defines roles and responsibilities for SOEs' financial management in overseas investment cases, and it will help create a reasonable procedure to guide any decision.

Financial feasibility must be established before any decisions on mergers and acquisitions, the MOF said. The regulation lists the format and content for financial due diligence and feasibility studies, to help executives avoid decisions that might violate regulations.

Written summaries must be filed for specific procedures such as evaluating loans and clarifying conflicts of interest.

The regulation details fiscal controls for overseas investment, and will create and improve mechanisms for SOEs' performance evaluation.

"Foreign investment" in the regulation refers to SOEs in Hong Kong, Macao and Taiwan, and regions outside China, through mergers and acquisitions, joint ventures, purchasing equity and other ways to obtain corporate and non corporate ownership, control, management rights and other rights, the MOF said.

The regulation is not applicable to SOE representative offices, and stresses accountability for the executives of the SOEs that seek growth globally.

  

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