Under the increasing trend of cash dividends and repurchases of listed companies, the A** market ushered in new regulations on repurchases and cash dividends, lowered the threshold for repurchases, and encouraged listed companies to increase dividends.
On the evening of December 15, the China Securities Regulatory Commission issued the revised "Rules for Share Repurchase of Listed Companies" and "Regulatory Guidelines for Listed Companies No. 3 - Cash Dividends of Listed Companies". The Shanghai and Shenzhen ** stock exchanges have simultaneously revised and improved the relevant supporting rules and clarified the operational requirements.
Among them, the Shanghai Stock Exchange revised and issued the Guidelines for Share Repurchase, the Guidelines for Standardized Operation and supporting business guidelines, and improved the two systems of share repurchase and cash dividends. That is, to lower the repurchase threshold and further improve the repurchase constraint mechanism;Further strengthen the guidance of increasing cash dividends, and urge listed companies to reasonably determine dividend plans.
Since the beginning of this year, nearly 300 Shanghai-listed companies have disclosed share repurchase plans, with a total maximum planned amount of nearly 75 billion yuan. The amount of cash dividends of listed companies on the Shanghai Stock Exchange in 2022 has reached 17 trillion yuan, more than the sum of the amount of IPO, refinancing and major shareholders' shares** in the current year.
Regarding the next step, the Shanghai Stock Exchange said that it will continue to guide, encourage and promote more listed companies to return investors with real money through share repurchase and cash dividends, continuously stabilize investor expectations, and promote the healthy development of the capital market.
Lower the threshold for buybacks and encourage listed companies to increase dividends.
The revision is to refine the adjustment arrangements for the implementation of the relevant rules of the China Securities Regulatory Commission at the level of self-regulatory rules, and do a good job in the convergence work. According to the Shanghai Stock Exchange, share buybacks and cash dividends play a positive role in activating the capital market and boosting investor confidence, which is directly related to the vital interests of investors, especially small and medium-sized investors, and is conducive to maintaining the stable operation of the capital market.
Among them, the Guidelines for Share Repurchase have been revised in two aspects, one is to lower the repurchase threshold to improve the convenience of share repurchase;The second is to further improve the repurchase restraint mechanism.
According to the "Guidelines for Share Repurchase", the conditions for "disk protection repurchase" are relaxed, and one of the trigger conditions is adjusted to "the company's cumulative decline of 30% within 20 consecutive trading days" is adjusted to "cumulative 20%", and the trigger threshold is lowered. Add a condition of "disk protection repurchase", and take "** lower than the highest *** of the most recent year ***50%" as one of the trigger conditions to increase the convenience of repurchase.
At the same time, the basic conditions for repurchase of listed companies will be moderately relaxed, and one of the conditions will be adjusted from "one year of listing" to "six months of listing". The prohibition of repurchase window periods will be abolished, including the repurchase window period of annual reports, semi-annual reports, quarterly reports, performance forecasts, and performance express reports, and the monitoring of repurchase transactions will be strengthened in the future, and the supervision during and after the event will be strengthened.
Optimize the prohibitive provisions on the declaration of repurchase transactions, and according to the rules of collective bidding, the original restriction of not allowing repurchase transactions to be declared half an hour before the first half hour is adjusted to the prohibition of declaration during the call auction stage. The limit on the number of shares repurchased per day will be abolished, including the requirement that "the number of shares repurchased every 5 trading days shall not exceed 25% of the sum of the ** trading volume in the 5 trading days prior to the date of the first repurchase of shares" and other relevant requirements.
On the other hand, the Guidelines for Share Repurchase encourage listed companies to form institutional arrangements for the implementation of share repurchases, and add a provision that "listed companies are encouraged to improve the share repurchase mechanism in their articles of association or other governance documents, and clarify the trigger conditions and repurchase procedures for share repurchases". When the conditions for a protective repurchase are triggered, the board of directors should promptly understand whether there are major events and other factors that may have a greater impact on the stock price, and fully listen to the opinions and demands of shareholders on whether the company should implement the share repurchase.
At the same time, the Shanghai Stock Exchange has revised the relevant provisions of the guidelines for the standardized operation of the Main Board and the Science and Technology Innovation Board.
The "Guidelines for Standardized Operation" makes simultaneous efforts from two aspects: on the one hand, further strengthen the orientation of increasing cash dividends. Strengthen the transparency of information disclosure, and guide companies that do not pay dividends or pay less dividends to increase their dividends. Encourage listed companies to increase the frequency of cash dividends under the conditions of profit distribution. On the other hand, urge listed companies to reasonably determine the dividend plan. Strengthen restraints on companies with major operational risks, high asset-liability ratios and poor operating cash flow, so as to prevent adverse impacts on the company's production and operation and solvency.
The scale of cash dividends and repurchases in Shanghai has increased year by year.
In recent years, the amount of share repurchase and cash dividends in the A** field has gradually increased.
Among them, the total cash dividends of Shanghai companies have increased year by year, from 895.8 billion yuan in 2017 to 172 trillion yuan, nearly doubling in 5 years;The overall cash dividend ratio has remained above 30% and has been increasing year by year, reaching 40% in FY2022.
According to the data of the past three years, the dividend scale of Shanghai companies has increased year by year, and the total cash dividend in 2022 will be 172 trillion yuan, an increase of 59% over 2019, with an average annual compound growth rate of over 26%.
At the same time, the frequency of dividends of Shanghai companies is also increasing. In terms of the number of companies that have made interim dividends and launched special dividends in the semi-annual and third quarterly reports, this data was only 49 in 2019, and it has reached 102 this year, with a cumulative increase of more than double.
764 companies have paid dividends of more than 30% for three consecutive years, and 117 companies have paid dividends of more than 50% for three consecutive years107 companies have paid cash of more than 1 billion yuan for three consecutive years, of which 17 companies, including the six major banks, PetroChina, Sinopec, Yangtze Power, Kweichow Moutai and Ping An of China, have paid dividends of more than 10 billion yuan for three consecutive years.
From the perspective of dividend yield, calculated according to the ** price on December 15 and the cumulative dividend amount in the past year, the dividend yield of 297 Shanghai companies in Shanghai in the past year is more than 3%, and the dividend yield of 124 companies is more than 5%, an increase of more than 4% compared with 2019.
Among them, 12 companies, including COSCO Shipping Holdings, China Shenhua, Yankuang Energy, and Shaanxi Coal, have dividend yields of more than 10%. From the perspective of sustainability, 47 companies such as Conch Cement, Daqin Railway, and Industrial and Commercial Bank of China have maintained dividend yields of more than 5% for three consecutive years.
In terms of repurchases, since the beginning of this year, Shanghai companies have added 309 repurchase plans, and the upper limit of the planned repurchase amount is close to 80 billion yuan, an increase over last year, of which 15 companies with a market value of more than 100 billion yuan have disclosed repurchase plans.