Shanghai Stock Exchange, Guidelines on the Distribution of Cash Dividends by Listed Companies

If a listed company's cash dividend policy is unreasonable, its decision-making procedure does not comply with regulations, or its cash dividend policy is unfavourable to small and medium shareholders, the Shanghai Stock Exchange shall encourage the shareholder(s) that alone or jointly hold shares accounting for at least 10% of the company's shares to propose the holding of an extraordinary shareholders' general meeting (Article 19)

Related legislation: PRC Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p.21; PRC Securities Law (Amended), Oct 27 2005, CLP 2006 No.1 p.31; Decision on Amending Several Provisions on the Distribution of Cash Dividends by Listed Companies, Oct 9 2008; Circular on Matters Relevant to Further Implementing Cash Dividends by Listed Companies, May 4 2012, CLP 2012 No.5 p.27; Shanghai Stock Exchange, Share Listing Rules (2012 Revision)

Issued: January 7 2013
Effective: as of date of issuance
Interpreting authority: Shanghai Stock Exchange

Main contents: In general, listed companies may opt for the policy of fixed amount, fixed ratio, extra dividends, and remaining dividends as their policy of distributing cash dividends (Article 6).

If a listed company is profitable during an annual report period, the aggregate undistributed profits are positive, and the percentage of the net profit vested in the shareholders of the listed company in that year accounted for by the cash dividends not yet distributed or the total amount of cash dividends proposed to be distributed (including the interim cash dividends that have been distributed) is less than 30%, the company shall disclose in detail the relevant matters in the announcement of the board of directors on the review and adoption of the annual report (Article 10).

If the percentage of the annual net profit vested in the shareholders of a listed company accounted for by the total cash dividends distributed by the listed company in the year in question is no less than 50%, and such percentage is no less than the benchmark interest rate for one-year fixed deposits for the same period as announced by the People's Bank of China, and the determined cash dividend policy allows investors to reasonably expect that the aforementioned two indicators may persist, the Shanghai Stock Exchange will, when the company engages in refinancing, merger, acquisition or reorganisation, grant “green channel” (fast-track) treatment within the relevant scope of duties and responsibility it undertakes, and issue supporting documents to the competent authorities (Article 15).

If a listed company's cash dividend policy is unreasonable, its decision-making procedure does not comply with regulations, or its cash dividend policy is unfavourable to small and medium shareholders, the Shanghai Stock Exchange shall encourage the shareholder(s) that alone or jointly hold shares accounting for at least 10% of the company's shares to propose the holding of an extraordinary shareholders' general meeting (Article 19)

Related legislation: PRC Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p.21; PRC Securities Law (Amended), Oct 27 2005, CLP 2006 No.1 p.31; Decision on Amending Several Provisions on the Distribution of Cash Dividends by Listed Companies, Oct 9 2008; Circular on Matters Relevant to Further Implementing Cash Dividends by Listed Companies, May 4 2012, CLP 2012 No.5 p.27; Shanghai Stock Exchange, Share Listing Rules (2012 Revision)