The Study Of Legal Matter On Internal Privatization Of State-owned Enterprises

The reform of state-owned enterprises in China has undergone exploration and perfection. A general mode of reform in enterprise has been established, which is named as internal privatization by some scholars at home. The internals is regareded as the main body of the mode during the process of the privatization of the state-owned enterprises. There is no consensus on the phenomenon of the reform in the economic community, and the recent "Lang-Gu" Controversy made it the focus of the public media. The comprehensive and thorough research on the problems related to the reform is of great constructive and realistic significance of building up and perfecting the reform, improving laborers' social and economic status and safeguarding staff's legitimate interest. This paper will analyze the topic from the law perspective based on the Law and Economics theory, and provide multiple perspective thoughts of the research.The basic theoretical analysis of the internal privatization mode is the theoretical premise of studying the topic. In this paper, Internal Privatization refers to, in the voluntary conditions, former state-owned enterprise management and the staff use the financial compensation from breaking the labor contract betweens the former enterprises and transferring their identity of being state workers to buy the original property rights of state-owned enterprises, realize the reform mode that the state-owned enterprises becomes employee ownership enterprise. This model is similar with the EMBO in the west and the mode of 'Insider-Control' in the East Europe, but they are more different, its localization in China has distinct characteristics. And the model has deep theoretical basis, efficient infrastructure system, so it is feasible to implement the internal privatization in state-owned enterprises in China. However, the mode is embedded with the inner limitations when the legal system in economic market is immature. Therefore, it is required to perfect the related legal environment, remove the obstacles in system and prevent the hidden problems caused by its own inner limitation in the process of the reform implementation.Defining the subject of internal privatization is the first concrete system problem that appeared in operation and must be solved. The paper considers that 'the internal' that is, 'the management and the staffs' in enterprises. To analyzing from two perspectives——political economics and the identity of shareholding subject, affirm the internals' rationality of being the subject of share -holding in enterprises and ascertain qualification and condition being the subject of system reform. During the process of internal reform, the Agent-ESOP Association that stands for the staffs' benefits should be established to push the reform.Property right exchange in internal privatization pattern is a link which appears most problems during the current unperfected environment of market economy. Therefore, reinforcing law gauge system and perfecting property right trading environment is the key to solve the problem. The seal expounds respectively from three aspect——the main body of property- right exchange , procedure and supervision——then points out the practice problems in concrete operation and makes out relevant legislative regulation.The reallocation of staff members in internal privatization is the core of the problem in the pattern. The seal relates the important significant of staff reallocation and emphasizes that the staff reallocation is not only economic problem but also a social problem, and it is necessary to emphasize on the legal protection of the staff rights. But in fact, the problems of consciousness field, operating procedure and social external environment have being appeared in the process of staff- reallocation. To solve the problems, it is necessary to comply with the basic principles of staff- reallocation and respectively resettle the staff from earlier period, medium period and later period.The internal shares setting and corporation governance structure of the rational distribution in new enterprises after internal privatization is the ultimate purpose of the SOEs' internal reform. There are two patterns of the internal share structure in the new enterprises——balanced share and unbalanced share. In current situation of China, we should choose 'unbalanced share' and the management and technical personnel should be the biggest share-holders. In conclusion, the legislative reconstruction is essential to the stockholders' equity of reformed enterprises. On the corporate governance structure of new enterprises, it is required to rationally distribute right structure of the shareholder meetings, corporate board and supervisory board in reformed enterprises and enforce the staffs' right to participate and decision-making. Finally we should adjust the relations betweens the new and old meetings and rebuild selection mechanism of the manager in new enterprises after internal privatization in order to establish the enterprises' corporate governance structure scientifically.