April 8, 2017 / 1:01 PM / 4 months ago

China's top securities regulator vows to punish 'iron roosters' with no dividend payout

FILE PHOTO - Liu Shiyu, Chairman of China Securities Regulatory Commission (CSRC), attends a news conference on the sidelines of the National People's Congress (NPC) in Beijing, China, March 12, 2016.Jason Lee /File Photo

SHANGHAI (Reuters) - China's top securities regulator urged listed companies to reward investors with cash dividends, vowing to punish stingy "iron roosters."

Liu Shiyu, Chairman of the China Securities Regulatory Commission (CSRC) also warned listed firms against raising money for blind investments, or designing complicated share structures that facilitate insider trading and other malpractices.

"Paying cash dividends is a basic way to reward investors ... and the ultimate source of a stock's intrinsic value," Liu said in a recent speech, a transcript of which was posted on CSRC's website on Saturday.

CSRC will take "tough measures" against those "iron roosters" who haven't plucked a single feature for many years, even though they have the ability to pay dividends, Liu said.

Liu, installed as head of China's securities watchdog following the 2015 stock market crash, has made investor protection his priority, having stepped up a crackdown on market manipulation and tightened disclosure rules.

Rejecting the view that the share price of a growth company will rise even without cash dividends, Liu said a company's growth is far from certain, so buying a stock with no dividend would be merely a game of "passing flowers until the drum beat stops."

"Steady and stable cash dividend payout often signals healthy financial and operational conditions of a listed company," Liu said.

"On the contrary, if a company doesn't pay dividends with no proper reasons, it could be the signal of accounting fraud or mismanagement."

Reporting by Samuel Shen and Brenda Goh; Editing by Ros Russell

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