The "827 New Regulations" superimposed a series of policies that took effect, and the net reduction of A-shares turned into a net increase

Finance Associated Press, March 25 (Reporter Gao Yanyun) The phenomenon of "reducing holdings", which has a significant negative impact on investor sentiment, has been greatly curbed.

Statistics show that as of March 22, since the beginning of this year, important shareholders of listed companies have reduced their holdings by 18.758 billion yuan, a year-on-year decrease of 84.86%, and the reduction in the same period last year was 123.929 billion yuan. Last year's "827 new regulations on shareholding reduction" is the direct driver of the significant decline in shareholding reduction, from the implementation of the new regulations for 7 months, the total reduction of important shareholders of listed companies was 102.536 billion yuan, a year-on-year decrease of 69.64%. It cannot be ignored that the decline in the total amount of holdings is due to the decline in stock prices.

On August 27, 2023, the China Securities Regulatory Commission (CSRC) announced that the CSRC fully considered market concerns, carefully studied and evaluated the share reduction system, and made requirements for further regulating the shareholding reduction behavior of relevant parties. That is, if the listed company has a broken issue or broken net, or has not paid cash dividends in the past three years, and the cumulative cash dividend amount is less than 30% of the average annual net profit in the past three years, the controlling shareholder and actual controller shall not reduce the company's shares through the secondary market.

The China Securities Regulatory Commission (CSRC), the Stock Exchange and other regulators have put strict regulation of shareholding reduction in an important position, and "preventing detours and maintaining market confidence" has become an important expression in the relevant regulatory opinions of the CSRC, and a variety of technical means are used to effectively curb illegal shareholding reduction. At the same time, sell-side research is bullish on the continued slowdown in the reduction of significant shareholder holdings.

This year, the reduction of holdings has fallen by more than 80%.

Since the beginning of this year, the increase and decrease of important shareholders of listed companies has been much better than that of the same period last year.

According to the statistics of Flush iFind, as of March 22, the important shareholders of listed companies increased their net holdings by 2.163 billion yuan, which was slightly greater than the reduction of holdings, with a total increase of 20.92 billion yuan and a total reduction of 18.758 billion yuan.

In terms of increasing holdings, since the beginning of this year, important shareholders of listed companies have increased their holdings 2,847 times, involving 1,486 shareholders, and a total of 18.758 billion yuan, with 806 reductions, involving 506 shareholders. The net increase in the number of shares involved 619 listed companies, and the net reduction of shares involved 296 listed companies.

In the same period of 2023, the important shareholders of listed companies will reduce their holdings by 85.977 billion yuan, which is not as strong as the reduction of holdings, with a total market value of 37.952 billion yuan and a total market value of 123.929 billion yuan.

In contrast, since the beginning of this year, the scale of the increase in holdings of important shareholders of listed companies has not expanded significantly, and the increase in holdings is equivalent to 55.12% of the same period last year. However, the reduction of holdings contracted significantly, and the reduction fell by 84.86% year-on-year.

In recent years, there has been an increase in holdings and a decrease in holdings, which is a major trend. Although the net intake is still negative, the value has narrowed significantly.

From 2019 to 2023, the net reduction of important shareholders of listed companies will be 314.826 billion yuan, 585.759 billion yuan, 414.454 billion yuan, 192.680 billion yuan, and 116.030 billion yuan, and the increase in holdings will be 180.778 billion yuan, 185.982 billion yuan, 299.296 billion yuan, 392.477 billion yuan, and 335.290 billion yuan, and the reduction value will be 495.604 billion yuan, 771.741 billion yuan, 713.749 billion yuan, 585.158 billion yuan, and 451.320 billion yuan.

From the perspective of 2023, last year's net increase in holdings increased significantly, increasing by 39.78% compared with 2022, of which last year's increase in holdings decreased by 14.57% and decreased by 22.87%.

The "827 New Regulations on Reducing Holdings" caused the reduction of holdings to drop by 70%.

The implementation of the new regulations on shareholding reduction on August 27 last year was the main driver of the significant decline in the reduction of holdings by important shareholders of listed companies.

On August 27, 2023, the China Securities Regulatory Commission (CSRC) announced that the CSRC fully considered market concerns, carefully studied and evaluated the shareholding reduction system, and made requirements for further regulating the shareholding reduction behavior of relevant parties.

The China Securities Regulatory Commission (CSRC) requires that if a listed company has a broken issue or a broken net value, or has not paid cash dividends in the past three years, and the cumulative cash dividend amount is less than 30% of the average annual net profit in the past three years, the controlling shareholder and actual controller shall not reduce the company's shares through the secondary market. Where a listed company discloses that it has no controlling shareholder or actual controller, the largest shareholder and its actual controller shall be subject to the above-mentioned requirements.

At the same time, it strictly controls the total amount of shareholding reduction by shareholders of other listed companies, guides them to reasonably arrange the pace of shareholding reduction according to the market situation, and encourages controlling shareholders, actual controllers and other shareholders to promise not to reduce their shareholdings or extend the lock-up period of shares.

As of March 22 this year, since the implementation of the new regulations on 827 shareholding reduction last year, important shareholders of listed companies have reduced their holdings by 27.99 billion yuan, a year-on-year decrease of 87.89%, a total increase of 74.546 billion yuan, a year-on-year decrease of 30.06%, and a total reduction of 102.536 billion yuan, a year-on-year decrease of 69.64%.

Strictly regulate the reduction of holdings by detours

On March 15, the China Securities Regulatory Commission simultaneously issued two documents, "Opinions on Strictly Controlling the Access to Issuance and Listing and Improving the Quality of Listed Companies from the Source (Trial)" and "Opinions on Strengthening the Supervision of Listed Companies (Trial)", which further required and standardized the strict regulation of shareholding reduction.

It is mentioned that it is necessary to prevent detours and reduce holdings and maintain market confidence. The reduction of holdings will be "linked" to the net breaking, breaking, and dividends of listed companies. Strictly supervise the detour of shareholding reduction through divorce, pledge liquidation, refinancing and lending, securities lending and selling, etc. Strengthen the technical control of shareholding reduction, effectively curb illegal shareholding reduction, and order the violating entity to repurchase the shares reduced in violation of the regulations and pay the price difference.

It is worth noting that in terms of regulating the reduction of shareholdings, the regulatory requirements prohibit major shareholders, directors and senior executives from participating in derivatives transactions with the company's shares as the subject matter, prohibit the refinancing and lending of restricted shares, and the borrowing and selling of restricted shares, so as to prevent the use of "tools" to detour and reduce holdings.

On March 22, the Shanghai Stock Exchange issued an initiative to all Shanghai companies, in terms of increasing investor returns, suggesting that listed companies formulate medium and long-term dividend and share repurchase plans, explore multiple dividends a year, carry out repurchase and cancellation, formulate stock price stabilization plans, and guide shareholders to reasonably reduce their holdings to return investors and enhance investors' sense of gain.

During the two sessions of the National People's Congress this year, Feng Yidong, a member of the National Committee of the Chinese People's Political Consultative Conference and general manager of Zhongtai Securities, will submit five proposals, among which Feng Yidong proposed to link the dividends and repurchases of listed companies with the reduction of shares of controlling shareholders.

"When the sum of the cumulative dividend amount received by investors in the secondary market of a listed company and the cumulative repurchase amount of the listed company is less than a certain percentage (such as 50%) of the cumulative financing amount of the listed company in the secondary market, the controlling shareholder (the largest shareholder) cannot reduce its shares. Feng Yidong made such a suggestion.

Huaxi Securities Research Report said that under the tone of stabilizing the capital market, IPOs and important shareholder reductions will continue to slow down.

(Finance Associated Press reporter Gao Yanyun)