China's cabinet pledges enhanced protection for small investors
SHANGHAI Dec 27 (Reuters) - China's cabinet pledged to strengthen protection for small investors in the country's capital markets, promising to keep unsophisticated investors out of certain areas, boost corporate dividend payouts and increase voting rights for small shareholders.
China's policymakers have introduced a long list of reforms in recent years to clean up the country's unruly stock market, which is widely viewed as a casino in which investment returns bear little relation to the performance of the real economy.
The State Council, China's cabinet, said in a statement posted on its website on Friday that the government would create a system for classifying investors into groups based on their tolerance for risk and understanding of capital markets with unqualified investors barred from certain markets.
Listed companies should disclose clear dividend payment plans and said that independent directors and brokers should express opinions about whether dividend plans harm the interests of smaller investors, the council said. The cabinet also urged companies to conduct share buybacks when share prices drop below net asset value.
In China's policymaking process, the State Council often lays out broad principles, which specific agencies such as the China Securities Regulatory Commission may implement with detailed regulations.
The State Council also said companies should improve voting rights for small investors, including allowing small investors to vote for directors and increasing use of online voting. Companies should be forbidden from restricting voting to shareholders whose holdings are above a particular threshold.
The cabinet also promised to enhance supervision of corrupt practices in the capital markets, including creating a database of reports of dishonest behavior by industry participants, which investors can consult in order to choose financial service providers.
(Reporting by Gabriel Wildau and Lu Jianxin; Editing by Matt Driskill)
- Police hunt for motive as search for Malaysian jet spans hemispheres |
- Crimeans vote over 90 percent to quit Ukraine for Russia |
- Ukraine, Russia agree Crimea truce until March 21-Ukraine minister
- Malaysian PM says lost airliner was diverted deliberately |
- Democrats seek ways to limit Obamacare fallout after Florida defeat