2024 China Season Review

Below are key takeaways from ISS’ recently released 2024 Proxy Review: China. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Knowledge Center and its Library tab and to corporate subscribers by logging into Compass then selecting Governance and the Governance Library or Governance Exchange tab.

• New regulations regarding dividend payments. Promoted by the revised rules and regulations related to dividend distributions, the percentage of A-share listed companies paying no dividends decreased to 23.3 percent in 2024, ending the upward trend for the past five years. Additionally, 172 listed companies requested shareholders approve the authorization of the board to determine interim dividends, which is a new agenda item since this year.
• Record high repurchase schemes were proposed by companies in 2024: The number of share repurchase schemes proposed by companies in 2024 increased substantially as compared to previous years. The significant rise has been triggered by the government’s encouragement for more frequent and consistent dividend distributions, as well as the inclusion of share repurchase spending as part of the calculation for cash dividends.
• Enhancement of minority shareholder rights: The revised Company Law now accords shareholders individually or collectively holding one percent of total outstanding shares the right to submit shareholder proposals as well as file lawsuits for breaches of fiduciary duties by directors, supervisors, and senior executives at wholly-owned subsidiaries.
• Revised delisting criteria aims to enhance quality of listed companies: The revised Listing Rules have tightened regulatory oversight on listed companies by expanding the delisting criteria to include triggers related to major legal violations, financial underperformance, market-based performance and corporate governance issues.

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By: Ada Lu, Elodie Zeng, Harry Liu, Harry Sun, Mengzhen Zhang, Rui Ning Cheng, Xiao Xie, Xinyi Yang, Yuan Yao