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Firms 'must pay cash dividends'

(China Daily/Xinhua)
Updated: 2008-10-10 09:05

China's securities regulator yesterday said listed companies must pay dividends in cash rather than stock over three years before submitting their refinancing applications.

Another major move to boost the falling stock market, it could help encourage long-term investment and reduce market volatility, the China Securities Regulatory Commission (CSRC) said.

In the new regulation stipulating cash dividend payment, the CSRC said: "The listed firms, if applying for refinancing, must pay dividends in cash totaling no less than 30 percent of its distributed profits over the previous three years."

The regulation went into effect yesterday.

In the draft version released in August, companies were allowed to pay dividends either in cash or stock.

The listed firms were also ordered to reveal their cash dividend policies and previous cash dividend data to investors in their annual reports.

Cash dividends could offer stable investment returns and prompt large institutional investors to reduce market speculation, the regulator said.

A couple of huge refinancing plans earlier this year triggered a market plunge on concerns over stake dilution and liquidity stress.