Comment On The System Of Mandatory Dividends Of Listed Companies In Our Country

In China’s securities market, the majority of listed companies ignored the protection of shareholders’equity. They took measures of less dividends or no dividend, or inequality in the distribution, considering only a few big shareholders’ benefit. Big shareholders use the "Capital Majority" principle and their abundant capital to let their stock bigger than anyone’s, leading inequality of shareholder’s right. These ills dramatically eroded the majority of small shareholders’ interests. And more seriously, the shareholders themselves are indifferent to their equities. All of this resulted in greatly decreased motivation of small and medium-sized shareholders’ investment enthusiasm, which influenced the stability and growth of the securities in the capital market. However, the implementation of mandatory dividend policy will bring the following benefits:to enhance the investment value, protect the interests of investors, improve the current situation of information disclosure of listed Corporation, increase market transparency, improve the quality of the listed Corporation. The final results are protection of rights and interests of the shareholders’investment, and the stability of the listed company’s capital.It is known that mandatory dividend policy is the government behavior, and it belongs to administrative intervention. While the listing of enterprises is a pure market behavior, the administrative intervention will make a large number of inefficient state-owned enterprises run roughshod in the stock market, affecting the quality of capital market. Moreover, dividends or not is actually the enterprise’s internal affairs. The government’s active intervention will not only harm the autonomy of the enterprise, but also the enterprise marketing. Furthermore, the government, in the process of implementing mandatory dividend policy, applys it to all enterprises and treats them the same. It will increase the burden of some developing enterprises, and ultimately affected the expansion of their scale.To better solve the problem of dividends of listed companies, on one hand we should improve the mandatory dividend system, on the other hand need to look for other alternative measures. The enterprises may issue preferred shares independently, and let the shareholders who have earned profits release their hollow voting rights, to increase the company’s operational autonomy. At the same time, they can also develop institutional investors to stabilize the capital market, and perfects the information disclosure system, establish the shareholder lawsuit of mandatory dividends, reform the tax system, and eventually ease the ills brought by mandatory dividend policy to a certain extent.