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Four types of enterprises under special financial supervision
The Government has issued regulations on financial supervision, business evaluation and information transparency for State-owned enterprises (SOEs) and those with State-owned capital contribution, listing four types of enterprises that will be put under special financial supervision.
Accordingly, enterprises will be supervised if they are discovered to have problems at a time when the yearly financial report is being made or auditing activities and financial supervision are underway. The problems include:
- Enterprises meet with losses and their debt/equity ratio exceeds the regulated safe point.
- Enterprises have incurred losses that account for 30 per cent of equity or accumulated losses are higher than 50 per cent of equity.
- Enterprises have the ratio of due debt lower than 0.5.
- Enterprises are discovered to make up financial report, providing wrong figures about business results.
These enterprises are requested to make plans to restructure their organization and business and financial activities to submit to their owners within 20 days from the issuance of the decision on special financial supervision status.
Those enterprises can get out of the list if their problems are solved in two consecutive years.
In contrast, those continuing with losses in two consecutive years will have to change their ownership or be dismissed and go bankrupt as regulated.
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