CSRC to scrutinise cash positions of listed firms

PUBLISHED : Friday, 11 May, 2012, 12:00am
UPDATED : Friday, 11 May, 2012, 12:00am


The mainland's securities regulator is inspecting listed firms to identify those that have not allocated a reasonable amount of cash for dividend payouts.

In its latest effort to protect the interests of retail investors, the China Securities Regulatory Commission (CSRC), under its new chairman, Guo Shuqing, has directed its branches to examine the cash position of listed companies. The aim is probably to force profit-making, but stingy firms to distribute cash dividends to investors, people with knowledge of the matter say.

The investigation is in line with Guo's efforts to urge listed firms to pay out more cash dividends so as to bolster the weak stock market.

The CSRC will probably take administrative measures to punish profitable firms that do not distribute dividends to shareholders.

The inspections focus on profit-making firms' cash position and their decision-making on dividend payouts, the people said.

More than 600 listed firms that posted a net profit for 2011 did not pay a single cent in dividends.

In 2010, more than 850 mainland-listed firms did not declare cash dividends.

The CSRC published a circular on Wednesday evening that required listed companies to fully disclose information about their dividend proposals in an attempt to enhance transparency in dividend payouts.

Last year, mainland firms distributed a combined 606.7 billion yuan (HK$745.74 billion) in cash dividends to shareholders, accounting for 31.4 per cent of their total profits.

Since he took office at the CSRC in late October, Guo has been stepping up pressure on listed firms to reward investors with more cash dividends, believing it was the most efficient way to underpin the slumbering stock markets.

The mainland's key stock gauge was among the world's worst-performing stock indices in 2010 and 2011.