Shanghai bourse urges firms to distribute cash dividends

The Shanghai Stock Exchange released guidelines on Jan 7 urging listed companies to distribute cash dividends of no less than 30 percent of their net profit.

The stock exchange said the proportion was decided based on the dividends payout of listed companies in the last three years, with 30 percent considered a reasonable average figure.

Shanghai-listed companies, with cash dividends higher than 50 percent of their profits may be fast-tracked when they apply to raise funds, and when they apply for other approvals, including M&A deals, according to the guidelines.

In recent years, Shanghai-listed companies are distributing an increasing number of cash dividends to investors, but the dividends' payout proportion does not compare with that of mature markets in other countries, according to a source with the Shanghai Stock Exchange.

Also, some companies do not have a steady dividends payout policy, and some don't offer clear forecasts on cash dividends, the guidelines said.?

By the end of 2011, only 347 Shanghai-listed companies — or 40 percent of the companies that had been listed for not less than three years — had distributed cash dividends for three consecutive years.?