Restrictions on non-main business investment by SOEs set up in Shandong

Recently, Shandong released the measures for the supervision and administration of investment by enterprises under the ownership of the province.

According to the measures, the annual investment plan of provincial enterprises should abide by the investment principles and be consistent with the financial budget. The proportion of non-primary business investment in the total annual investment plan shall not exceed ten percent in principle.

Shandong proposed that the provincial SASAC should supervise and manage the investment activities of enterprises and fulfill the responsibilities of investors in accordance with the principle of capital management, focusing on guiding the investment direction, standardizing the decision-making process, improving the return on capital and maintaining the safety of capital.

The responsibilities of Shandong SASAC include researching and guiding the investment direction of provincial stated-owned capital, confirming the main businesses of enterprises, and supporting enterprises to make investment based on their primary businesses, development strategies and plans, etc.

Investment by enterprises shall confirm to their functional orientation, development strategic planning and investment management system, focus on the main businesses, and strictly control the investment in non-primary businesses, industries with severe overcapacity, high-risk businesses and low-end inefficient industries.

In terms of on-going management, the government proposed that if the preliminary design estimate exceeds the feasibility estimate by more than 20% (inclusive) or the investment exceeds the original estimate by more than 20% (inclusive), the decision-making procedure shall be re-implemented in accordance with the provisions.

Editor：梁子硕