China to ease share buyback rules amid a sluggish market

BEIJING (Reuters) – China’s securities regulator said on Friday it plans to revise rules to make it easier for listed companies to buy back shares in a bid to bolster corporate value and protect investor interest.

The China Securities Regulatory Commission (CSRC) published the draft rules as China’s benchmark CSI300 Index has lost more than 20% so far this year amid gloomy growth outlook.

The announcement, which could improve market sentiment, comes ahead of China’s politically key Communist Party Congress opening on Sunday.

The rule changes are aimed at encouraging listed companies to buy back their shares and “actively safeguard their investment value and protect the interest of smaller shareholders”, the CSRC said in a statement on its website.

Buybacks can be triggered when a company’s shares fall 25% within 20 consecutive trading days, according to draft rules soliciting public opinions. That compares with the current trigger of a 30% decline.

In addition, a company will be allowed to implement share buybacks six months after listing, according to the rules, compared with 12 months now.

The CSRC will also shorten the window where companies, and their senior executives, are barred from buying shares.

The existing bar for share buybacks is relatively high, and the rule changes are designed to facilitate such behaviors, the CSRC said.

(Reporting by Beijing newsroom; Editing by Toby Chopra and David Evans)