The bustling stock market

It is necessary to further regulate cash dividends of listed companies

Standardizing cash dividends of listed companies is something that the stock market management has always attached great importance to. In particular, in recent years, the management has repeatedly emphasized that listed companies should use cash dividends to reward investors, which has also made the management pay more and more attention to the standardized management of cash dividends of listed companies. Until October 10 this year, the China Securities Regulatory Commission also decided to revise the cash dividend-related clauses of the "Guidelines for the Supervision of Listed Companies No. 20 - Cash Dividends of Listed Companies" and the "Guidelines for the Articles of Association of Listed Companies", and publicly solicited opinions from the society.

It is necessary to further regulate cash dividends of listed companies. For example, in this revision, disclosure requirements and other institutional constraints are strengthened for companies that do not pay dividends to urge them to pay dividends; companies with large financial investments but low dividend levels are given special attention, and urged to increase their dividend levels; at the same time, constraints on companies with abnormally high dividend ratios are strengthened to guide reasonable dividends. In addition, companies are encouraged to increase the frequency of dividends when conditions permit. The introduction of these measures is obviously well-targeted, and can further regulate the dividend behavior of listed companies, allowing listed companies to pay attention to corporate development while also taking into account returns to investors.

However, from the perspective of supervision, it is obviously not enough to just regulate the cash dividends of listed companies. The cash dividends of IPO companies also need to be regulated. In fact, from the current market situation, the management of cash dividends of IPO companies is obviously a weak point of the regulatory authorities. As a result, the cash dividend behaviors of IPO companies are varied and even arbitrary. For example, some IPO companies paid dividends lavishly before the IPO, dividing up the company's net profit, and then prepared to replenish the blood through IPO, which has a very negative impact on the market.

For example, the practice of first draining out dividends and then replenishing blood through IPO is obviously ugly, and it is nakedly treating the stock market as an ATM for IPO companies. Faced with such companies and such major shareholders, investors will have a natural aversion and resistance. It is difficult to believe that such companies and major shareholders can treat investors well and pay attention to the interests of investors after the company goes public.

Not only that, this practice of first hollowing out dividends and then seeking blood supplement through IPO obviously does not take into account the development of the company. After all, this hollowing out dividend by some IPO companies does not only occur one year before the company submits the IPO application, but some occur two or three years before the IPO application is submitted. Some companies have been carrying out hollowing out dividends two or three years before the IPO application is submitted. This practice of dividing up the company's net profit obviously does not take into account the development of the enterprise. Although this company tried to supplement blood through IPO, what if the company's IPO application is rejected? For example, recently an IPO company was terminated by the exchange because of this hollowing out dividend behavior. It can be seen that this hollowing out dividend is not only not conducive to the development of the company, but also affects the company's listing process. Therefore, it is necessary to strengthen the management of the cash dividends of IPO companies and make the cash dividends of IPO companies standardized.

How to regulate the cash dividends of IPO companies? The first thing is to make IPO companies pay attention to the standardized management of cash dividends. After all, IPO companies are different from listed companies. Listed companies are public companies and need to be supervised by the public. Therefore, there are clear information disclosure requirements. Before the IPO is completed, IPO companies are not listed companies and do not bear the information disclosure obligations of listed companies. Therefore, it is difficult for the public to supervise them. Especially in some private enterprises, the controlling shareholders have absolute controlling rights. Therefore, the controlling shareholders often regard the company as their own private property and do whatever they want. Therefore, there is a lack of awareness of standardized management on the issue of cash dividends. For companies that are about to go public, this practice of controlling shareholders is obviously inappropriate and must be corrected. They must increase their awareness of standardized management.

Secondly, the IPO company and its controlling shareholders should know, understand and abide by the law, and increase their awareness of doing things according to the law. For example, on the issue of cash dividends, according to the current "Company Law", the company cannot distribute all the net profits of the year. For example, Article 166 of the "Company Law" clearly stipulates that when a company distributes the after-tax profits of the year, it shall withdraw 10% of the profits and include them in the company's statutory reserve fund. If the accumulated amount of the company's statutory reserve fund is more than 50% of the company's registered capital, it may no longer withdraw. The same clause also stipulates that if the company's statutory reserve fund is not sufficient to make up for the losses of previous years, before withdrawing the statutory reserve fund in accordance with the provisions of the preceding paragraph, the losses shall be made up with the profits of the current year. Therefore, the company's net profit cannot be divided at will, and must also comply with the provisions of the "Company Law".

In addition, for IPO companies, it is necessary for the regulatory authorities to issue a "Guide to Cash Dividends of IPO Companies" in accordance with the regulations of listed companies, and make clear provisions for cash dividends of IPO companies. For example, it is clearly stipulated that in the first three years of submitting an IPO application, the annual cash dividend of an IPO company shall not exceed 30% of the net profit of the year, to avoid IPO companies from making sudden dividends or hollowing out dividends. At the same time, during the IPO review, IPO companies that have sudden dividends or hollowing out dividends will be directly rejected and the company's IPO listing will be terminated. In this way, the behavior of IPO companies making sudden dividends or hollowing out dividends will not occur.