The China Securities Regulatory Commission — Beijing's equivalent of the U.S. Securities and Exchange Commission — is pressing the country's listed companies to adopt more generous dividend policies.
Previously, China-listed companies that wanted to issue additional stock had to pay out at least 20% of their annual average profit for the past three consecutive years in the form of shareholder dividends (cash or stock).
The CSRC wants to raise the minimum amount to at least 30% of profits to shareholders. If a company refuses to comply, it will be punished by not being able to float new bonds or sell additional shares.
According to the Chinese agency,
"Giving fair returns to shareholders is part of listed firms' responsibilities and is the foundation of stable and healthy development of the securities market."
Listed companies will also have to include information on their cash dividend policies and previous cash dividend data in their annual reports.
If they don't declare cash dividends? Well, they'll have to tell investors why, along with what they plan on doing with their retained earnings!
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