SSE Issues a Public Initiative to SSE-listed Companies to Launch Special Action of "Corporate Value and Return Enhancement"
On March 22, 2024, the Shanghai Stock Exchange (SSE) issued an initiative to all SSE-listed companies, urging them to actively participate in the special action of "Corporate Value and Return Enhancement". The initiative aims to further implement the spirit of the 20th CPC National Congress and the Central Financial Work Conference, continuously implement the State Council's Opinions on Further Improving the Quality of Listed Companies, adhere to strong supervision, risk prevention, and promote high-quality development, stimulate the endogenous momentum and sense of responsibility of listed companies for high-quality development and enhancing investment value.
Investors are the foundation of the market, while listed companies are the cornerstone of the market. With the goal of "further enhancing the quality and investment value of listed companies", the initiative guides listed companies to better fulfill their due responsibilities as market entities and better reward investors. In the early stage, the STAR Market played the role of a "pilot zone" for reform, actively exploring and taking the lead in launching the initiative of "Corporate Value and Return Enhancement" for listed companies, with SSE-listed companies actively following suit. Currently, more than 380 SSE-listed companies have launched related programs for "Corporate Value and Return Enhancement". Building on the previous practical experience and listening to various opinions, this initiative encourages listed companies to formulate the Corporate Value and Return Enhancement Action Plan 2024, further launching specific measures that are comprehensive, systematic, targeted, and can be implemented, operated, and verified from six aspects: enhancing operation quality, increasing investor returns, accelerating the development of new qualitative productive forces, and strictly implementing the responsibilities of the "critical few", etc.
I. In terms of improving operation quality, emphasizing targeted measures. It is recommended that listed companies take specific measures to improve operating indicators such as capacity utilization rate and net asset return rate, and optimize asset structure and industrial layout through high-quality industrial mergers and acquisitions, etc. II. In terms of increasing investor returns, emphasizing a tangible sense of gain. It is recommended that listed companies establish medium- to long-term dividend and share repurchase plans, explore multiple dividends in a year, carry out repurchase and cancellation of shares, formulate schemes for stabilizing share price, guide shareholders to reduce their holdings reasonably, and reward investors to enhance their sense of gain. III. In terms of developing momentum, focusing on new quality productive forces. Listed companies should be guided to increase research and development investment, promote new product development, optimize talent motivation, strengthen industry-university-research cooperation, and promote high-quality development of the company through specific measures. IV. In terms of strengthening communication with investors, enhancing the transparency of the company. It is recommended that listed companies take specific measures such as improving the readability of announcements, formulating investor communication plans, and guiding key executives to participate in investor communication, in order to enrich investor communication methods and broaden communication channels. V. In terms of standardizing governance, highlighting the governance goal of protecting small and medium-sized investors. Listed companies should pay more attention to protecting the legitimate rights and interests of investors, especially small and medium-sized investors, in major issues such as production and operation, investment, and mergers and acquisitions, and enhance investors' participation and sense of identification. VI. In terms of strengthening the responsibility of the "critical few", enhancing the binding of interests. Listed companies should be encouraged to reasonably link the compensation of directors, supervisors or senior management members with the operating efficiency and market value performance, and establish internal accountability mechanisms such as performance-based compensation recovery. They are also recommended to introduce performance indicators such as asset return rate and investment returns into equity incentive conditions, which are more closely related to investor interests.
On the basis of emphasizing listed companies to fulfill their due responsibilities as market entities, the initiative also actively promotes the construction of a market ecosystem for investing in high-quality listed companies. The initiative advocates for investors, especially institutional investors, to actively practice the concept of rational, value, and long-term investment, and pay more attention to listed companies with high quality, responsibility, and good returns. The SSE will also continue to improve the index product system, optimize the index investment ecosystem, and provide more choices for investors to allocate high-quality listed company stocks through multiple channels.
In this special action, the SSE encourages all SSE-listed companies to participate, and suggests that constituent stock companies of the SSE 50 Index, SSE 180 Index, STAR 50 Index, and STAR 100 Index take the lead in demonstration. At the same time, the Exchange encourages eligible companies to release bilingual versions of action plans in Chinese and English to better serve their investors at home and abroad. In addition, the initiative also clarifies specific requirements for the decision-making process, information disclosure, and improvement of evaluation in the special action plan, guiding the formation of open and transparent market constraints.
In the future, the SSE will implement the decision and deployment of the China Securities Regulatory Commission (CSRC), carry out the requirements of CSRC's four policy documents, further promote the high-quality development and investment value enhancement of listed companies, continuously enhance investors' sense of gain and satisfaction, and work together with all parties in the market to promote the high-quality development of the capital market.