CSRC Issues New Guideline to Boost Market Value of Listed Companies
The China Securities Regulatory Commission (CSRC) has rolled out Guideline No. 10 on Market Value Management, a key regulatory step to help A-share listed companies better reflect their investment value and enhance shareholder returns. Effective immediately, the guideline outlines actionable measures while setting clear responsibilities for corporate leadership.
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Practical Steps for Enhancing Value
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Listed companies are encouraged to adopt methods such as mergers and acquisitions (M&A), equity incentives, employee stock ownership plans, cash dividends, investor relations management, information disclosure, and share buybacks. These actions aim to align market valuations with the companies' operational quality, providing a clearer reflection of intrinsic value.
The regulation also targets companies in major indices, like the CSI 300, requiring them to establish and disclose detailed market value management systems. Firms trading below net asset value for over a year must develop valuation improvement plans, addressing investor concerns about long-term underperformance.
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Fostering Transparent and Effective Governance
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The guideline emphasizes the importance of aligning governance practices with market value enhancement. Boards are expected to integrate shareholder interests into strategic decisions, while senior executives play a critical role in implementing these strategies effectively. Transparency is key—companies must ensure timely and accurate disclosures and maintain strong investor relations.
Controlling shareholders are also encouraged to take proactive steps, such as increasing shareholdings during undervaluation periods, signaling confidence in the company's long-term prospects.
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Stronger Oversight and Feedback Integration
THREE
The CSRC has tightened regulatory expectations to address prolonged undervaluation or governance lapses. Noncompliance, such as failing to disclose required plans or engaging in illegal market behavior, may lead to regulatory actions, including warnings and corrections.
During the consultation phase, the CSRC reviewed 156 relevant suggestions, making adjustments to improve clarity and reduce the administrative burden, while maintaining the focus on execution efficiency.
With these measures in place, the CSRC aims to drive better alignment between company performance and investor expectations, reinforcing trust in China's capital markets.
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