Two hundred and twenty companies listed on the Shanghai Stock Exchange had recovered 21.8 billion yuan (US$2.79 billion) of debt owed by their controlling shareholders by February 16, the China Securities Journal reported Saturday.

Thirteen companies are still waiting to retrieve misappropriated funds totaling 3.17 billion yuan, but only a few of them will be able to do that in the short term, said the report.

The China Securities Regulatory Commission, the country's securities market watchdog, recently launched an investigation in conjunction with the Shanghai bourse into seven of the 13 companies and vowed to hand over criminal suspects to the police.

In June 2006, China's legislative body adopted an amendment to the criminal code that makes misappropriation of a listed company's funds by controlling shareholders a crime.

To prevent controlling shareholders from embezzling funds, listed companies should strengthen internal control over fund usage and use the law to punish embezzlers, said sources with the Shanghai bourse.

The State Council initiated the fund recovery campaign in November 2005 in a bid to improve the quality of the country's 1,400 listed companies, safeguard the interests of shareholders and ensure the healthy development of the stock market.

The misappropriation of large sums by controlling shareholders has been a major problem affecting China's burgeoning stock market.

(Xinhua News Agency March 4, 2007)