CSRC Plans to Optimize Price-Support Share Buybacks

36Kr learned that a responsible official from the China Securities Regulatory Commission (CSRC) answered reporters' questions on recent efforts to stabilize the market and expectations. To further improve the ease of share buybacks by listed companies and leverage the market's inherent stabilizing function, the CSRC, after extensive and in-depth research, plans to make the following adjustments and optimizations to share buybacks necessary to protect company value and shareholder interests (referred to as price-support buybacks): First, add a share price falling below the IPO price ("breaking issue price") as one of the circumstances permitting price-support buybacks, provide that price-support buybacks are not subject to the restriction that "the company's shares must have been listed for at least six months," and lift the restriction preventing price-support buybacks from being submitted during the opening and closing call auction phases, among other changes. Second, require listed companies within 36 months of listing to strictly and conscientiously fulfill the share price stabilization measures in their listing commitments when their share price triggers the conditions for price-support buybacks. Third, require listed companies with excess IPO proceeds to implement buybacks promptly when price-support buyback conditions are triggered. Fourth, require listed companies to specify in their annual cash dividend plans that a certain proportion of funds be allocated to a dedicated buyback fund; require listed companies with excess IPO proceeds to allocate a certain proportion of those excess proceeds to the dedicated buyback fund for share buybacks and cancellation; and require that gains from selling price-support buyback shares through centralized bidding be included in the dedicated buyback fund. Next, on the basis of in-depth research and demonstration, the CSRC will expedite revisions to the "Rules on Share Buybacks by Listed Companies" to strengthen the binding force of price-support buybacks. Before the formal revision of the rules, the CSRC will increase coordination with relevant parties to support, encourage, and urge listed companies that meet the conditions, especially constituents of major indices and leading technology companies, to actively implement share buybacks in line with the above requirements and their own circumstances, and to continuously manage market value well.