On December 15, the China Securities Regulatory Commission (CSRC) issued the "Rules for Share Repurchase of Listed Companies" (hereinafter referred to as the "Repurchase Rules"), which is intended to promote listed companies to attach importance to repurchases, implement repurchases, standardize repurchases, and actively safeguard the value of companies and shareholders' rights and interests. At the same time, it has intensified the crackdown on "flickering repurchases" and strictly investigated and dealt with those who use repurchases to carry out insider trading, market manipulation, and other illegal acts.
Since the beginning of this year, the enthusiasm for repurchase of listed companies has increased. According to statistics, more than 1,300 listed companies have issued repurchase announcements during the year, involving more than 100 billion yuan. The corresponding relaxation of relevant repurchase conditions is conducive to supporting listed companies to carry out share repurchases.
The "Repurchase Rules" optimizes the conditions for the repurchase necessary to maintain the company's value and shareholders' rights, that is, the "disk protection repurchase", that is, relaxes the existing conditions for the repurchase that is "necessary for maintaining the company's value and shareholders' rights", and adjusts one of the trigger conditions, "the company's *** decline has reached 30 in 20 consecutive trading days" to "has reached 20 cumulatively", and the trigger threshold is lowered.
At the same time, a new "necessary to maintain the company's value and shareholders' equity" repurchase conditions, the "** lower than the highest *** 50 in the last year" as one of the trigger conditions, increase the convenience of repurchase, the stock price difference in the latest year for listed companies to use the repurchase tool more options.
The Repurchase Rules also cancel the prohibition of the repurchase window period, solve the practical problem that listed companies are subject to the window period and cannot repurchase, and reduce the repurchase range restrictions. The basic conditions for repurchase of listed companies have been moderately relaxed, and the basic conditions for repurchase of listed companies have been adjusted from "listing for one year" to "listing for six months" to meet the repurchase needs of newly listed companies. And according to the call auction rules, the original restriction of not being allowed to declare repurchase transactions in the first half hour is adjusted to the call auction stage, and the daily repurchase period is added.
The Repurchase Rules encourage listed companies to form repurchase mechanism arrangements, 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".
In addition, the obligations of the board of directors in the case of "disk protection repurchase" are solidified, and when the conditions of "disk protection repurchase" are clearly touched, according to the Repurchase Rules, when the relevant conditions and conditions are touched, "the board of directors shall promptly understand whether there are major events and other factors that may have a greater impact on the stock price, actively communicate and exchange with shareholders, especially small and medium-sized shareholders, through various channels, and fully listen to the opinions and demands of shareholders on whether the company should implement share repurchase." ”
The Repurchase Rules strengthen the monitoring mechanism of repurchase transactions, increase the intensity of supervision during and after the event, strictly investigate and punish illegal acts such as insider trading and market manipulation in accordance with the law, strictly prevent "flickering repurchase", and add the provision that "the first exchange may take self-regulatory measures or impose disciplinary sanctions in accordance with the business rules".
In addition, it stipulates that listed companies shall not carry out share repurchase and share issuance at the same time, and clearly defines the scope of "implementation of share repurchase behavior" and "implementation of share issuance behavior", so as to facilitate implementation. In accordance with the spirit and provisions of the reform of the independent director system, the relevant content is adjusted or deleted, and independent directors are no longer required to express independent opinions on the repurchase matter.
Previously, due to the promise of repurchase but not implementation, Hezong Technology received a decision on administrative supervision measures from the Beijing Securities Regulatory Bureau, took regulatory measures to order the company to correct, and included the relevant violations in the integrity file, requiring the repurchase to be completed in accordance with the rectification period. The Shenzhen Stock Exchange also issued a letter of concern and initiated disciplinary proceedings against the company and the violating parties.
Whether it is the design of rules or regulatory cases, the regulatory authorities are strict in accordance with the law, crack down on all kinds of information disclosure violations and violations, urge listed companies to strictly fulfill their repurchase commitments, and order the repurchase to complete the repurchase within a time limit for "repurchase default", and the regulatory measures of "long teeth and thorns" and "real and hard" have become the new prescription.
The China Securities Regulatory Commission made it clear that it will strengthen regulatory law enforcement in the future, and resolutely crack down on relevant entities that use repurchase to engage in insider trading, market manipulation and other illegal acts once verified, which indicates that after the tolerance and convenience of the repurchase system are improved, the China Securities Regulatory Commission will also pay more attention to the maintenance of market order, crack down on illegal acts, create a good market ecology, and provide a solid guarantee for the standardized use of repurchase tools.
Towards the end of the year, A-share buybacks continued to heat up. On December 13, Gree Electric announced that as of the 11th, the company had repurchased a total of 6137 through the repurchase of the special ** account810,000 shares, with a total repurchase amount of 201.3 billion yuan. On the same day, 10 listed companies, including Nanshan Aluminum, Bairun Co., Ltd., and Credit Testing Standards, also disclosed repurchase-related matters.
As of the 14th, 329 A-share companies have repurchased in December, with a repurchase amount of 7.8 billion yuan. Since the beginning of this year, a total of 1,316 A-share companies have repurchased, with a cumulative number of 83 shares3.7 billion shares, with a repurchase amount of more than 80 billion yuan. Especially since the second half of this year, a large number of listed companies have concentrated on disclosing repurchase plans, continued to increase the implementation of repurchases, and intensively sent positive signals to the market, forming a "centralized repurchase tide".
As for the reasons for the implementation of the buyback, the listed companies have said that it is based on the confidence in the future sustainable development prospects and the high recognition of the company's value, in order to safeguard the interests of investors, especially small and medium-sized investors, and promote the stable and sustainable development of the company. Zheng Zhigang, a professor at the School of Finance and Economics of Chinese University, said that reflecting the increasing willingness of listed companies to actively use repurchase tools to maintain the value of the company, it conveys confidence in the company's long-term investment value and future development prospects, which helps boost the company's stock price and promote the market recovery. Among them, there are many central state-owned enterprises, industry leaders and high-quality science and technology innovation board companies, which have taken the initiative to intensively issue repurchase announcements, actively playing a leading role, and driving more listed companies to carry out repurchases.
Tian Lihui, dean of the Financial Development Research Institute of Nankai University, believes that share repurchase, as a basic institutional arrangement in the capital market, has the functional role of optimizing the capital structure, maintaining the company's investment value, and improving the return mechanism for investors. In recent years, listed companies have prudently formulated repurchase plans in combination with their own realities, implemented repurchases in accordance with laws and regulations, and the activity of share repurchases has continued to increase, with the number and scale of repurchases showing a growth trend, and the market has responded well. The promulgation of the Repurchase Rules, on the premise of following the basic principles of repurchase and the current provisions of the Company Law, is conducive to promoting the continuous heating up of the repurchase tide.
In the past, listed companies repurchased shares mostly for equity incentives, but a significant change this year is that more and more listed companies will repurchase shares for cancellation. Recently, a number of companies have issued announcements showing that they intend to change the use of repurchased shares from the implementation of the equity incentive plan to the cancellation and corresponding reduction of registered capital, including Sen Kirin, Chujiang New Materials, Jiajiayue, etc., have issued an announcement on adjusting the use of the company's repurchase of special account shares and canceling and reducing the registered capital.
Share repurchase is a kind of company law stipulates six types of share repurchase purposes, different uses, and the functions they show are also different. Repurchase for capital reduction and cancellation, will reduce the company's total share capital, in the case of the company's overall value unchanged, the value of assets per share and income increase, can play an immediate effect on the effect of returning investors, is an important way to return investors. The repurchase is used for equity incentives, employee stock ownership plans, and convertible bonds to equity, which is an optimization of the governance structure, which reduces the number of shares issued in the short term, which can form a certain support for the stock price, and in the long run, it introduces value creators and long-term investors, which is also conducive to the company's value enhancement.
Liu Biao, a researcher at the Capital Finance Research Institute of China University of Political Science and Law, said that repurchase cancellation is often regarded as a kind of behavior to protect the market, and the most direct manifestation is to increase the stock price, which has a more obvious leading role in the market, which can reduce some of the company's cash and improve the efficiency of capital utilization. The increase in the number of companies that have been repurchased and cancelled is one of the important signals of the bottom of the market.
Industry insiders pointed out that the repurchase is used to maintain the company's value and equity rights, which can more fully release the signal of undervaluation of the stock price, clearly transmit value information to the market, and reduce the number of shares in circulation for a certain period of time, so as to support the stock price and achieve "disk protection". For several statutory purposes of repurchase, in the overall and long-term terms, it will help to enhance the company's value and return to investors, and the company can choose to apply it according to its own actual situation. Judging from the recent market situation, more and more listed companies take the initiative to choose to cancel after share repurchase, and the willingness and effect of direct return to investors are more obvious, which is welcomed by investors. Regulators also encourage listed companies to use buybacks and cancellations to better reward shareholders and promote the company's value.
In October this year, the head of the relevant department of the China Securities Regulatory Commission said in an interview that it would give priority to encouraging buybacks and cancellations. The use of repurchase tools by listed companies and the functions they play often depend on the listed company's own situation and needs, which belongs to the scope of corporate autonomy and is not suitable for compulsion.
It is worth noting that while the listed company repurchases the company's shares with real money, the upper limit of the amount of industrial capital to repurchase and increase its holdings exceeds 300 billion yuan.
Judging from the announcement of listed companies, the reasons for the increase in the repurchase of industrial capital are based on the confidence in the company's future development prospects and the recognition of long-term investment value, and at the same time, in order to promote the company's sustainable, healthy and stable development, enhance investor confidence, and effectively safeguard the interests of small and medium-sized investors. Industry experts said that in the context of the regulatory authorities encouraging buybacks and holdings, the team of industrial capital buybacks and holdings is expected to continue to expand in the future, which can effectively boost market confidence and improve market sentiment.
As an important member of the capital market, industrial capital plays a role in maintaining the smooth operation of the capital market. Chen Li, chief economist of Sichuan Finance, said that at the current node, the frequent repurchase and increase of industrial capital has positive significance. For the A** market, it has played a positive role in stabilizing the smooth operation of the market and further improving the liquidity of the market.
The author of this article: Cheng Dan, **Times, original title: "The new repurchase rules have landed!".The trigger threshold is lowered, repurchase cancellation is encouraged, and "flickering repurchase" is strictly prevented.