A Horse, A Doney, or A Elaphure? Share Cooperative Enterprise as an Emerging Business form in China and the Legal Concerns with its Developments

Abstract

Cooperatives, known as associations organized for purposes of rendering economic services, without gain to itself, to members who own and control them, exist in one form or another in almost every country of the world. Four years ago, after examining the ups and downs of cooperatives as a business form in China, Professor John G. Craig of York University wrote in his book that:' It will be interesting to study how those organizations develop in the future and how effectively they can serve the needs of a billion citizens. The urgency of such a desire has been proved by the impact of the recent massive transformation of traditional cooperatives and state-owned enterprises ('SOEs') into share cooperative enterprise ('SCEs'). Although the legal status of SCE as a newly emerged business form has not been finally settled, it has ground breaking potential to further the economic reform in China. At the recently held 15th National Conference of the Communist Party of China(' the CPC'), the organization has been endorsed as a new device in the reform that should be supported and promoted. The call to reform deeply troubled SOEs by transforming them into SCEs raises concerns about the organization's legal identity, characteristics and operational procedures. This article reviews and assesses the legal framework governing SCEs and related issues. Part 1 provides an introduction to the development of the organization and the current legislative framework; Part 2 examines the legal characteristics and the establishment procedures; Part 3 identifies the capital structure of SCEs; Part 4 discusses the management structure of SCEs; Part 5 highlights the distribution schemes of SCEs; Part 6 illustrates the practical operation of SCEs through some case studies; Part 7 articulates some current controversies and problems concerning SCEs; and finally, Part 8 draws some concluding remarks.