Guangdong Securities Regulatory Bureau Urges Listed Companies in Its Jurisdiction to Improve Governance Mechanisms and Treat All Investors Equally
Release date:2017-09-30
In accordance with the CSRC’s “Fairness is Around Us” special campaign for investor protection, since the beginning of this year, the Guangdong Bureau has urged listed companies within its jurisdiction to enhance their voting and dividend policies, streamline their grievance-handling mechanisms, and faithfully honor their public commitments. These measures have helped listed companies strengthen their governance frameworks, ensure fair treatment of all investors’ interests and concerns, and enable investors to genuinely feel that “fairness is around them.”
I. Enhancing the Voting and Resolution Mechanism to Safeguard the Participation Rights of Small and Medium-Sized Investors
A sound and effective voting and resolution mechanism is the direct channel through which investors can participate in the governance of listed companies and safeguard their own rights and interests. To this end, at the beginning of the year, the Guangdong Securities Regulatory Bureau organized its staff to conduct a comprehensive survey of the status of mechanisms such as separate vote counting for small and medium-sized investors, proxy solicitation, and online voting in the articles of association of listed companies within its jurisdiction, and issued notifications to those listed companies that had not yet established or fully implemented these governance mechanisms. At the same time, the Bureau specially compiled and distributed the “Securities and Futures Legal Affairs Newsletter (Corporate Governance Special Issue)” to publicize the latest revisions to relevant laws and policies, including the “Guidelines on Articles of Association of Listed Companies,” and to urge listed companies in the jurisdiction to take the convening of their 2014 annual general meetings as an opportunity to complete the revision of their articles of association and related internal rules and regulations, thereby improving mechanisms such as separate vote counting for small and medium-sized investors, proxy solicitation, and online voting, and effectively safeguarding the right of all investors to participate in management decision-making. To date, among the 218 listed companies in the jurisdiction, 124 have revised their articles of association in accordance with the guidelines; 11 have had their proposed amendments approved by their boards of directors; and the remaining 83 have all submitted plans for revising their articles of association.
II. Implement the cash dividend policy and deliver tangible returns to investors
Since the beginning of this year, the Guangdong Securities Regulatory Bureau has conducted a comprehensive review and identified that certain listed companies within its jurisdiction have failed to comply with the regulatory guidelines regarding the prioritization of cash dividends over stock dividends, the decision-making procedures and mechanisms for profit distribution policies and their adjustments, the forms of profit distribution and the intervals between cash dividend payments, as well as the specific conditions for cash dividends. In response to these findings, the Bureau issued a special document urging listed companies to conduct another self-examination of their profit distribution systems in accordance with the requirements of documents such as “Regulatory Guidance No. 3 for Listed Companies—Cash Dividends by Listed Companies,” to revise and improve any provisions that do not comply with the regulations, and to encourage listed companies to increase the level of cash dividends. According to statistics, a total of 172 listed companies in the jurisdiction have either implemented or plan to implement cash dividends this year, accounting for 80% of all listed companies in the region, with total dividends amounting to RMB 32.4 billion—a year-on-year increase of 33.8%.
III. Strengthen oversight of the fulfillment of commitments and promptly investigate and punish breaches of trust.
Strengthening integrity-based supervision of listed companies helps solidify the foundation for effective corporate governance. In accordance with the CSRC’s requirements for building the capital market integrity database, the Guangdong Bureau promptly and dynamically updates information on newly made public commitments by listed companies within its jurisdiction, as well as on any changes in the status of commitment fulfillment, thereby enhancing the integrity supervision database for listed companies. The Bureau has also rigorously strengthened oversight of commitment fulfillment, designating 32 listed companies with 42 outstanding commitments that are still within their fulfillment periods as ongoing priority monitoring targets. Since the beginning of this year, it has urged the relevant parties to fulfill performance-compensation commitments—through cash payments or equity transfers—for six listed companies in the jurisdiction. Furthermore, in response to a breach of trust by a listed company’s controlling shareholder, who failed to transfer a renowned trademark series to the listed company within the prescribed commitment period, the Bureau imposed administrative regulatory measures in the form of warning letters on the relevant controlling shareholder and required prompt rectification.
IV. Optimizing the Dispute Resolution Mechanism and Ensuring Smooth Channels for Investors’ Appeals
The Guangdong Securities Regulatory Bureau consistently urges listed companies within its jurisdiction to assume primary responsibility for handling investor complaints in the course of routine supervision. Building on the fact that all such companies have already established comprehensive systems for managing investor complaints, the Bureau employs methods such as email notifications, telephone reminders, and scheduled meetings to ensure that newly listed companies promptly put in place similar systems and publicly disclose them on their corporate websites. The Bureau has conducted spot checks on the investor relations management practices of 45 newly listed companies, as well as those that have been suspended from trading due to the planning of material matters or that have received a high volume of complaints and reports. These checks focus on the status of hotline and email response services, as well as the development and maintenance of corporate websites, with corrective actions being urged for individual companies found to be deficient, thereby ensuring that communication channels between listed companies and investors remain convenient and unimpeded. With regard to reports and complaints that are amenable to mediation, the Bureau has formulated the “Key Guidelines for the Mediation and Handling of Reports and Complaints Involving Listed Companies within the Jurisdiction,” guiding listed companies to engage in amicable settlements with investors and to resolve disputes promptly and efficiently.
Follow us:
PanTum Technology.
Address: No. 3883, Zhuhai Avenue, Xiangzhou District, Zhuhai City
Postal Code: 519060