Wholly State-Owned Companies in China and Iran: A Comparative Legal Analysis to Differences of Regulations

Abstract

Wholly state owned companies (WSOCs) have a dramatic importance in all economies, including the Chinese and Iranian ones. Despite many similarities, Chinese and Iranian laws have, in this connection, different solutions for similar questions. In summary, despite Chinese law which requires every WSOC to only take form of a limited liability company, in Iran, a WSOC can form as a private joint stock or limited liability Company or a general partnership. Chinese law despite Iranian one lets representatives of staff and workers to join the WSOCs’ boards of directors and supervisors. Despite Iranian WSOCs which all have and can have general assembly for their own comprised of relevant ministries high ranking officials, the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) plays as general assembly for almost all Chinese WSOCs. Despite in Iran, interlocking directorate and management is not forbidden in China and there have been wrong regulations about requirement of SASAC’s permission for WSOCs bankruptcy application. This comparative legal research analysis shows that establishment of WSOCs is inevitable and every WSOC, whether profitable or not, must not be privatized, whether wholly or partly. In comparison to the Iranian law, Chinese law with deploying SASAC, not barring the interlocking management or directorate, and even creating some kind of interlocking general assembly membership has adopted a very concentrated approach which potentially combats corruption. But SASAC members are not elected by vote and they are principally unchangeable, this makes them corruptible. This much of state concentration along with prevailed economic situation leaves no room for private sector.Chinese departments cannot directly invest in WSOCs and play as their general assembly, so in comparison to relevant Iranian inter-ministerial system; this brings about an ultra-ministerial system in China encompassing countrywide administration interconnecting all Chinese WSCOs towards developmental goals.

Keywords: Wholly state owned companies (WSOCs), General Assembly, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), Board of Directors, Supervisory Board

DOI: 10.7176/JLPG/121-01

Publication date:May 31^st 2022