Text · Chen Xue, Sun Yanqiang
State-owned Assets Report Magazine Issue 4, 2024
Strengthening equity management is an important measure to strengthen and optimize state-owned capital, promote high-quality development, implement the regulatory requirements of state-owned assets, and effectively prevent risks. In recent years, joint ventures and cooperation between state-owned enterprises and enterprises of various ownership systems have played an important role in improving the efficiency of state-owned capital operation and allocation and developing a mixed-ownership economy. Due to historical reasons, the stock equity of large state-owned enterprises such as China Petroleum & Chemical Corporation (hereinafter referred to as "Sinopec") is generally characterized by a large number, wide distribution, complex levels and diverse categories, and the lack of effective means and methods of intensive management are more prominent. In view of the shortcomings of the Group's management and control capabilities, the Finance Department of Sinopec Group, as the leading department of equity management, conscientiously implements the work arrangements of the State-owned Assets Supervision and Administration Commission of the State Council and the Party Group of the Group Company, focuses on the construction of a strategic and intensive financial management and control system, adheres to the system concept, problem-oriented and bottom-line thinking, improves the institutional system, improves the operation mechanism, defines the management connotation, strengthens online supervision, and strives to create "pre-standardization, in-process monitoring, and post-assessment" Complete the equity management chain, effectively improve the level of equity management, and help enterprises achieve high-quality development.
Establish and improve the operation mechanism of equity management, so that there are people to manage and do
Since 2021, Sinopec has adapted to the actual equity management in the new stage, integrated the five systems introduced in the early stage, studied and formulated the "Sinopec Equity Management Measures" and a number of work specifications, and established an equity management list covering 8 headquarters departments and business units and more than 170 enterprises in accordance with the idea of "overall planning of leading departments + vertical control of professional lines + connection between business units and directly affiliated enterprises inside and outside", so as to effectively strengthen the management of equity participation while consolidating the effectiveness of controlling equity management. Horizontally to the edge, divide "1+X" management responsibilities. Strengthen multi-disciplinary work coordination, formulate a list of job responsibilities, clearly divide management functions, and promote the "matching seats" of each line to avoid management disputes or business crossovers. The leading departments for equity management were clarified, and the overall planning of Sinopec's equity management work was strengthened, and the relevant professional departments focused on strengthening the leadership of party building, implementing the responsibility for safe production, and strengthening the operation and management audit to implement vertical control. Establish a three-level management structure vertically to the end. According to the different business nature and enterprise level, the management responsibilities of the competent departments of the business department and other sectors and the directly affiliated enterprises are implemented at different levels, and the three-level structure of "group headquarters - business department - directly affiliated enterprise" is formed. Under the guidance and supervision of the competent business department, the directly affiliated enterprises shall fully exercise the rights and obligations of shareholders, and earnestly safeguard the legitimate rights and interests of state-owned assets. Eliminate blind spots and strengthen capital-level control. In view of the fact that vertical control is difficult to directly implement in shareholding enterprises, we focus on the performance of investors' rights, clarify the management departments or responsible units of equity participation one by one, track and monitor the operation of shareholding enterprises, coordinate major event reports, income dividends and risk prevention and control, explore equity analysis and evaluation from economic, strategic, control and other dimensions, and promote the adjustment of stock equity structure and the exit of inefficient and ineffective equity. Where multiple enterprises are involved in the same enterprise, one is determined to be the main body for centralized and unified management. Strengthen assessment and consolidate the management responsibility of equity participation. On the basis of the comprehensive inclusion of the equity of wholly-owned and holding subsidiaries in the vertical control of professional lines, we will strive to play the role of the "baton" of assessment, further incorporate the management of equity participation into the binding index assessment of the party group management leadership group, implement positive incentives at different levels to solve the problems left over from the history of equity participation and achieve incremental efficiency, continue to strengthen the rigid implementation of management systems and work requirements, and systematically promote the optimization and improvement of equity participation investment.
Reasonably define the connotation of equity management work, so that there is no lack of position, no offside
In accordance with the relevant requirements of state-owned assets supervision and the actual situation of the enterprise, Sinopec has clarified the connotation of equity management as follows: to control the process of equity formation and equity changes, to strengthen the daily management of equity statistics, analysis and evaluation, and to implement post-investment management of equity participation. In practice, for wholly-owned and holding legal person subsidiaries, the main focus is on the registration of state-owned property rights, the circulation and disposal of transactions, and the fulfillment of legal procedures; for shareholding enterprises, the focus is on breaking the "gray box" state, keeping a close eye on the key links of "investment, management, and withdrawal", so as to ensure that people can be recruited, things can be managed, and problems can be prevented, and "just investment and ignorance" can be resolutely prevented. Strengthen the management of equity formation. Strengthen the pre-investment review of the shareholders' agreement and the company's articles of association, standardize the rights, responsibilities and obligations of all shareholders, ensure that our control and shareholding ratio are reasonably matched, and avoid disjointed pre-investment and post-investment management. In the case of a controlling shareholder, the content of more than one-half of the voting rights passed outside the provisions of the Company Law shall be minimized. In the case of equal shareholding, the responsibilities of the shareholders' meeting, the board of directors and the management should be carefully allocated to avoid corporate governance deadlock. In the case of general equity participation, especially when the shareholding ratio is less than one-third, we should focus on safeguarding our rights as a minority shareholder, try our best to strive for the "one-vote veto" on guarantees, investments, capital exchanges, related party transactions and other matters, and clarify the dividend distribution, shareholder audit, equity withdrawal and other related contents in the articles of association and the terms of the shareholders' agreement. Strengthen the management of equity changes. Strictly implement the "Measures for the Supervision and Administration of State-owned Assets Transactions of Enterprises" and the "Interim Measures for the Administration of the Free Transfer of State-owned Property Rights of Enterprises" and other requirements for the supervision of state-owned assets, formulate the "Work Specifications for the Supervision of State-owned Assets Involving Changes in Equity in China", further standardize economic behaviors such as equity transfer, enterprise capital increase, and free transfer, operate in accordance with laws and regulations, and strictly prevent the loss of state-owned assets. Except for special circumstances, the transfer of state-owned equity to the outside world, the implementation of capital increase and share expansion of the affiliated enterprises, and the introduction of new external shareholders shall be carried out openly by entering the business institutions engaged in the equity of central enterprises, so that the progress must be advanced, the progress will be standardized, and the operation will be transparent. Strengthen equity risk management. Strengthen the awareness of equity investment risk prevention, promote the deep integration of equity basic management and risk early warning and disposal, strengthen the monitoring of abnormal situations such as changes in the controlling interest or actual control of the invested enterprises, major changes in the business environment, and behaviors that infringe on the interests of shareholders, and take timely response measures after analyzing the causes, so as to plug the management loopholes. Focus on the clean-up and disposal of inefficient and invalid equity participation, clarify the exit criteria, and meet the 8 situations of suspending production and business for more than 1 year, losing money for 3 consecutive years and no hope of turning around, and not paying dividends for 3 consecutive years without legitimate reasons. Since 2020, 70 inefficient and ineffective equity participation rights have been cleared and withdrawn, and 1.223 billion yuan of funds have been recovered. Strengthen the post-investment management of equity participation. Establish three types of list control mechanisms of "dispatched personnel performance ledger + major event management rules + equity income dividend ledger" to strengthen supervision at the capital level. In terms of dispatching personnel to perform their duties, the proportion of full-time directors and supervisors will be gradually increased, the ability to perform duties will be improved through pre-appointment and regular training, and the evaluation incentives and constraints will be strengthened through recall interviews and debriefings. In terms of major event reporting, the company designates a contact person for major event reporting, fully authorizes and delegates authority, and sets management authority at different levels and categories to improve management and operation efficiency. In terms of income and dividend monitoring, financial supervision and operation monitoring will be strengthened, and if the dividend distribution policy is not clarified, the articles of association will be amended through legal procedures and the articles of association will be amended, or a supplementary agreement will be signed to clarify it.
Comprehensively enhance the ability of dynamic equity management to achieve monitoring and evaluation
In view of the scattered information, low efficiency and difficulty in coordination in the early stage of equity management, especially the lack of equity management in place, Sinopec adheres to the problem-oriented approach, strives to open up the information flow of "investment, management and withdrawal", comprehensively upgrades the self-developed equity management system, and builds Sinopec's equity management data center in the mode of "data + platform + application", effectively improving the real-time online supervision ability of shareholding operation and investment. "One item and one file" has established an electronic file of equity, collecting 7,462 pieces of information on various institutions, 28,000 pieces of information on directors, supervisors and senior executives, and more than 100,000 pieces of operation and management data. At the same time, we will continue to improve the ability to sort out and analyze the basic information of equity participation, mine the internal connection between data and management, realize dynamic evaluation and rapid "portrait", and provide scientific decision-making assistance for the research and demonstration of stock equity holding strategies. Build a visualization application scenario for equity participation data. Make good use of the three databases of basic equity information, dispatched personnel information, and equity management business, integrate static information such as the basic situation of shareholding enterprises, corporate governance structure, and dynamic information such as the convening of the three sessions, major events, financial reports, and dividend distribution, supplemented by external big data and equity participation analysis and evaluation for panoramic display, expand the dimension and granularity of relevant data visualization, clearly convey opinions on shareholding strategies, and effectively improve decision-making support capabilities. Establish an evaluation index system for equity participation. Grasp the work orientation of "improving quality, increasing efficiency, preventing risks, and promoting circulation", distinguish three dimensions of economy, strategy, and control, and take the lead in establishing a shareholding evaluation index system that includes 8 first-level indicators such as profitability, asset quality, development status, input-output, synergy, management and control capabilities, risk prevention, and abnormal situations, and 20 second-level indicators such as return on net assets, total asset turnover rate, and capital preservation and appreciation rate. Build a shareholding analysis and evaluation model. Combined with the investment purpose and actual management, we strengthened practical exploration, and developed a shareholding evaluation module based on Sinopec's equity management system to effectively improve the quality and transmission efficiency of evaluation data. Regularly organize and carry out quantitative scoring, divide the stock of equity into four grades according to the scoring results, and refine the shareholding strategy one by one. The follow-up system will also introduce the operating data of similar companies inside and outside for horizontal benchmarking, so as to further improve the scientific rationality of the evaluation results. Strengthen the application of the results of equity participation evaluation. Establish a closed-loop tracking and supervision mechanism, guide affiliated enterprises to rationally use methods such as increasing holdings, reducing holdings or exiting to strengthen the management of equity participation value, and continuously improve the efficiency of state-owned capital allocation. If the evaluation result is grade A, the shareholding ratio can be moderately increased and the investment income of equity participation can be expanded under the premise of conforming to the development strategy. If the evaluation result is grade B, it is necessary to continue to play an active role as a shareholder and promote the consolidation and improvement of the operating results of the shareholding enterprises. If the evaluation result is B-file/C file, dynamic tracking shall be carried out according to the management level, classification and classification, and timely improvement shall be supervised, and if the evaluation result has not been significantly improved, it shall be transferred to the shareholding reduction library for normalized clean-up. Since the launch of the equity participation evaluation, the proportion of B-file \C equity participation has decreased by 8% year-on-year, and the quality of stock equity participation has been further consolidated. At present, Sinopec is continuing to carry out equity management improvement actions, and plans to use about two years to further consolidate the foundation, break through key points, and strive to promote the quality and efficiency of equity management to a new level, so as to truly manage the process, prevent problems, and achieve a good return on investment. (Author's Affiliation: Finance Department, China Petroleum & Chemical Corporation)
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