China reforms its public sector

Experts believed the new rule is a loosening of the former ban. Earlier in April 2005, the Ministry of Finance jointly issued rules to forbid existing management in large-scale SOEs from owning shares in case they bought out the company, the so-called management buy-out MBO. The ban was aimed at curbing losses of state-owned assets.

However, with the application of a new law which came into effect on January 1, 2006, that allowed listed companies to reward existing management with bonus shares, the banning of executives from buying shares in SOEs seemed baseless, 8216;China Daily8217; reported. 8216;8216;The new rule is aimed at motivating executives to better manage state-owned assets,8217;8217; an officer from SASAC said. 8216;8216;It shows the Government8217;s resolution to deepen SOE reforms.8217;8217;