China Creates Program to Boost Protection of Small Stock Investors
China unveiled a program that is aimed in boosting protection for small stock exchange investors which in recent years has been skeptical on the turbulent equity market of the nation. These prompted the government to promise to let unsophisticated investors out of certain areas and boost corporate dividend payouts while increasing voting rights of small shareholders.
The nation’s policymakers introduced a long list of reforms in hopes of cleaning up the country’s stock market that is widely viewed a way for investments to return and bears little relation to the real performance of the economy. The State Council said that they will be creating a system that will classify investors into groups based on their tolerance for taking risks and understanding capital markets that has unqualified investors that are banned from certain markets.
China’s policymakers have introduced a long list of reforms in recent years to clean up the country’s stock market, which is widely viewed as a casino in which investment returns bear little relation to the performance of the real economy. These listed firms must disclose any dividend payment plans and allow independent directors and brokers must share opinions on whether dividend plans can harm the interests of small investors.
Part of China’s policy making is laying out broad principles that specify agencies to implement the detailed regulations. Firms should also improve the voting rights of small investors and should allow small investors to vote for directors and increase the use on online voting as well. Certain companies should also be forbidden in restricting votes to share holders with holding above a particular threshold.