The China Securities Regulatory Commission (CSRC) has started investigation into the fund misappropriation issues of 17 listed companies.

The 17 companies have failed to recover the 9.2 billion yuan (US$ 1.15 billion) of debt by their controlling shareholders before the deadline, the end of 2006, a spokesman of the CSRC said on Sunday.

The companies include Sanjiu Medical & Pharmaceutical Co., China Textile Machinery Co. and Hebei Baoshuo Co..

Those who misappropriated funds in these companies will be prosecuted under the law, according to the spokesman.

Thirty six companies failed to meet the deadline, involving a total of 14.6 billion yuan of misappropriated funds. However, the other 19 companies have come out with a plan to recover the money, escaping the investigation.

The CSRC issued an ultimatum to listed companies in October 2005, requiring them to recover misappropriated funds by the end of 2006.

Last year, 402 companies listed on the Shanghai and Shenzhen bourses recovered 33.57 billion yuan misappropriated by their controlling shareholders.

The recover campaign was aimed to improve the quality of the country's 1,400 listed companies and safeguard the interests of shareholders.

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

(Xinhua News Agency January 8, 2007)