Design corporate governance structures carefully

Chinese enterprises should continue to improve their corporate governance structures to guard shareholders' interests.

The importance of adapting corporate governance structures to international best practice standards bubbles to the surface once again in light of the most recent twist in the Gome Electrical Appliances (Gome) power struggle between jailed founder and single largest shareholder Huang Guangyu and current Gome chairman Chen Xiao.

At a special general meeting on September 28, shareholders blocked the company from issuing new shares and revoked the company's “general mandate” (GM), which allows the board to bypass existing shareholders and sell off 20% of issued share capital at a discount. They also voted against Huang's motion to unseat Chen and another executive director, Sun Yiding.