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The Shanghai Stock Exchange (SSE) organized 5 listed companies, Yang Quan Coal Industry (Group) Co., Ltd., Harbin Dongan Auto Engine Co., Ltd., Aucma Company Limited, Xi'an Typical Industries Co., Ltd. and Luenmei Quantum Co., Ltd. for a briefing on cash dividend distribution at the trading hall on the afternoon of February 5. Over 50 persons attended the briefing, including persons in charge of these 5 companies, reporters of Xinhuanet.com, CCTV Finance & Economics, Shanghai Securities News and other media, well-known industry analysts, representatives of institutional investors and small-and-medium investors, and representatives of the Investment Service Center. Xinhuanet.com, CCTV Finance & Economics and SSE Roadshow Center made live broadcast of the briefing.
Cash dividend distribution is an important way for listed companies to pay back their investors and also a base of guiding investors’ long-term value investing. The briefing is another key measure of the SSE to keep guiding listed companies to make cash dividend distribution and to regulate listed companies that are able to make dividend distribution but not do so for a long time through information disclosure under guidance of the China Securities Regulatory Commission (CSRC); it is also the 1st time to organize listed companies to answer the questions on cash dividend distribution policy and the relevant implementation raised by the media and investors. To ensure the effectiveness of the briefing, the SSE has particularly stressed the following three aspects. First, participants of listed companies are strongly representative. Most participants are board chairpersons and secretaries of boards who would play a key role in formulating and implementing cash dividend distribution policies. Second, the invited media and investor representatives are of wide coverage. The questioners include institutional and individual shareholder representatives with their interests involved, securities analysts and representatives of the Investment Service Center who are familiar with the industry, and media reporters who have followed the news on cash dividend distribution. To enhance the degree of investor participation, the briefing was broadcast online, and an online questioning part has been set up as a channel for investors not at site to raise questions. Third, the communication is of high profession. The communication not only cared about whether listed companies have distributed cash dividends, but also focused on whether they are qualified for distributing cash dividends, the real reasons of not doing so, and the possible insufficiency in corporate management and investor’s consciousness of being returned. All these attempted to seek reasons from origins and supplement shortages, urge listed companies to make further improvement, and form more effective market discipline and regulatory constraints.
At the briefing, the investors, the securities analysts, the Investment Service Center’s representatives and the reporters raised over 10 questions on listed company’s capital usage efficiency, industry circle’s influence on cash dividend distribution, the overall cash dividend distribution level in the industry, the decision-making process for cash dividend distribution, and the changes of operational cash flow and entrusted loan balance. The 5 listed companies made detailed explanations on the reasons of not distributing cash dividends though they are legally qualified to do so from such aspects as strategic location, financial status, investment and construction, and industry competition, and they’ve put forward practical rectification measures. Dongan Auto Engine and Luenmei Quantum said they’ve drafted 2017 annual cash dividend distribution plans.
In recent years, the SSE has always regarded urging and guiding listed companies to pay back their investors through cash dividend distribution as an important fundamental task of its front-line regulation, market construction and protection of investors’ legitimate rights and interests. The SSE released the “SSE Guidance on Listed Companies’ Cash Dividend Distribution” in 2013, which has offered a standard and a basis for listed companies to make cash dividend distribution and release relevant information. And it has strictly required listed companies to make detailed disclosure on cash dividend distribution and urge listed companies that have not distributed cash dividends or distributed low cash dividends to hold a briefing for investors. As a results, the number and proportion of listed companies making cash dividend distribution have kept increasing; the total amount of annual cash dividend distribution have remained at about RMB600 billion, accounting for 30% or above of the net profits, and the proportion of companies making cash dividend distribution has remained at about 70%. A group of listed companies making cash dividend distribution at high proportions, including China Shenhua Energy Company Limited and Fuyao Glass Industry Group Co., Ltd., have become a ballast stone guaranteeing the stable operation of the Shanghai Stock Market and the investors’ return.
Meanwhile, there are a number of listed companies that have not distributed cash dividends for years. Some are due to their poor performance and tight cash flows and some are able to distribute cash dividends but have not done so. With regard to the former, the SSE will actively promote them to improve their operation and production and keep increasing the capacity of return for investors; as for the latter, the SSE will strengthen its regulatory efforts and urge them to make necessary cash dividend distribution to investors. For those not distributing dividends maliciously, the SSE will ask the CSRC agencies to make on-site inspections.
As a supporting measure for cementing the regulation on the information disclosure of cash dividend distribution, the SSE has, while holding the briefing, issued the letter of regulation work to 3 companies that have not distributed cash dividends for years and been mostly questioned in the market, as well as 8 ones that are qualified to distribute cash dividends but have not done so or have distributed low cash dividends. The SSE has required them to pay high attention to cash dividend distribution, keep enhancing their quality and pay back investors in cash.
