Hong Kong stock exchange’s proposal on dividend policy disclosure gains support
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A proposal by the exchange operator Hong Kong Exchanges and Clearing (HKEX) to require listed companies to disclose their dividend policies has received wide support from market participants, who believe it will enhance transparency and attract investors.
“The dividend policy is one of the most concerning topics for institutional investors,” said Eva Chan Yee-wah, chairwoman of the Hong Kong Investor Relations Association (HKIRA), which represents 1,300 investor relation officers in Hong Kong-listed companies.
“The HKEX proposal on dividend policy disclosure, if implemented, will add transparency and will enhance overall corporate governance of the Hong Kong market. This will attract more international investors to trade in Hong Kong.”
Many brokers and accountants echo Chan’s support of the proposal, which is one of the corporate governance reforms discussed in a consultation paper issued by the bourse operator. The two-month consultation period for the paper ended on Friday.
HKEX proposed that listed companies should disclose their dividend payment policies or explain why they are not disclosing them. They should also explain in detail how they determine whether to pay dividends and the level of payment.
“Dividend payments are an important means of investor return and a basic component of investment decision-making,” the paper said. “Consistent and sustainable dividend payouts are an indication of an issuer’s stability and future prospects.”