China Relaxes Share Buyback Rules to Boost Stock Market
22 September 2008 By Zhao Yidi
Sept. 22 (Bloomberg) -- China’s top securities regulator made it easier for listed companies to buy back their shares in an effort to boost the world’s worst performing major stock market this year.
Companies can start the share buyback process after two-thirds of shareholders approve it, and disclose details the next working day without seeking approval from the China Securities Regulatory Commission, according to a statement of the draft rules posted on the regulator’s Web Site yesterday.
The Chinese government is under pressure to revive a stock market that plunged 61 percent this year after almost tripling in 2007. The government last week scrapped the tax on stock purchases and said it’ll buy shares in three of the largest state-owned banks to shore up investor confidence.
Shareholders need to agree on the price range, the number of shares and the amount of cash to be used for the buyback, the regulator said. Firms aren’t allowed to buy back shares in the 10 days before their earnings results, and if they plan to make material announcements that may affect stock prices, it said.
Shares can’t be bought back at the price after a stock rises or falls by the daily limit, according to the draft rules. The regulator also required companies to disclose information every time they increase their stake by 1 percent in a buyback, it said.
The regulator is seeking public feedback on the draft rules until Sept. 28, it said.
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China Relaxes Share Buyback Rules to Boost Stock Market
22 September 2008
By Zhao Yidi
Sept. 22 (Bloomberg) -- China’s top securities regulator made it easier for listed companies to buy back their shares in an effort to boost the world’s worst performing major stock market this year.
Companies can start the share buyback process after two-thirds of shareholders approve it, and disclose details the next working day without seeking approval from the China Securities Regulatory Commission, according to a statement of the draft rules posted on the regulator’s Web Site yesterday.
The Chinese government is under pressure to revive a stock market that plunged 61 percent this year after almost tripling in 2007. The government last week scrapped the tax on stock purchases and said it’ll buy shares in three of the largest state-owned banks to shore up investor confidence.
Shareholders need to agree on the price range, the number of shares and the amount of cash to be used for the buyback, the regulator said. Firms aren’t allowed to buy back shares in the 10 days before their earnings results, and if they plan to make material announcements that may affect stock prices, it said.
Shares can’t be bought back at the price after a stock rises or falls by the daily limit, according to the draft rules. The regulator also required companies to disclose information every time they increase their stake by 1 percent in a buyback, it said.
The regulator is seeking public feedback on the draft rules until Sept. 28, it said.
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