The realm of publicly traded companies operates as the bedrock of a nation’s economy, directly influencing the performance of capital marketsThe underlying scenario illustrates an urgent need for improved quality among these entities, which holds significance not limited to enhancing market functionality but extends toward the ambitious goal of constructing a modern industrial frameworkRecently, the 2025 System Work Conference issued critical directives, emphasizing the nurturing of companies representative of high-quality developmentA particular focus was laid on reinforcing incentive structures around dividend distributions and share buybacks, thereby advancing the capital market's role in mergers and acquisitions while opening up diverse exit strategies for investors.

Fang Yi, Chief Strategy Analyst at Guotai Junan Securities Research Institute, asserts that the past year has seen effective measures aimed at enhancing the quality of listed companies

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Approaches spotlighted encompass various dimensions, including corporate governance, operational quality, and shareholder returnsThese actions have fueled improved corporate performance across the boardThe focus in the coming months may continue to revolve around tools for mergers, restructuring, market capitalization management, and incentive-driven buybacks to solidify a more resilient market foundation.

One of the most apparent advancements is the noticeable rise in shareholder returnsMajor state-owned banks have recently disbursed mid-term cash dividends, with four of these financial giants distributing a staggering 155.745 billion yuanThis development is symptomatic of a broader trend where A-share listed companies have collectively distributed dividends amounting to 2.4 trillion yuan over the past year, achieving a record highAdditionally, both the frequency and volume of these payouts have significantly increased.

According to the Shanghai and Shenzhen Stock Exchanges, there has been a robust rise in mid-term dividends for 2024. The number of companies on the Shanghai Stock Exchange disclosing dividends has surged by 354% to a total of 481, with several companies executing two or even three distributions within the same year

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In the Shenzhen market, 464 companies disclosed dividends, representing a 287% increase compared to the previous year.

The considerable shift in the cash dividend landscape among listed firms is closely connected to government policies aimed at enhancing oversight in this arenaIn April 2024, the newly released "Guo Jiu Tiao" guidelines emphasized tighter regulatory frameworks around cash dividends, aimed particularly at companies that had not dispersed dividends for extended periods or exhibited low payout ratiosMechanisms were introduced to curtail major shareholders' abilities to liquidate holdings in such companies and to incorporate risk warningsThe guidelines also proposed incentives for firms demonstrating robust dividend performance, encouraging stable and predictable payoutsThis includes measures for multiple dividends annually, pre-dividends, and festive distributions, such as those before the Spring Festival.

With sustained policy encouragement, companies are increasingly establishing regular dividend mechanisms, fostering a culture that values shareholder returns

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Tian Lihui, director of the Financial Development Research Institute at Nankai University, notes that the increase in the volume and frequency of dividends is optimization in action, allowing investors to perceive tangible returns on their investmentsThis burgeoning focus on returns is expected to bolster the attractiveness of long-term investments in the market.

Beyond cash dividends, share buybacks have emerged as another mechanism for publicly listed companies to enhance investor confidenceIn 2023 alone, A-share firms executed buybacks totaling over 244.5 billion yuan, marking a historical peakThe China Securities Regulatory Commission (CSRC) has committed to implementing guidelines that promote effective market capitalization management while bolstering the motivations for dividends and repurchases in the industry.

Mergers and acquisitions (M&A) are also experiencing a revitalization, contributing significantly to the transformation and scaling of listed firms

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Following the release of the "Six M&A Guidelines," the capital market has witnessed a new wave of mergers, characterized by increased market activity and a plethora of exemplary casesFor instance, the merger of China Shipbuilding with China Shipbuilding Industry Corporation, as well as other notable consolidation efforts in various sectors, exemplify this trendThese actions highlight the capital market’s pivotal role in resource optimization and industrial enhancement.

The data highlighting significant asset restructuring transactions showcases that sectors such as Technology, Media and Telecommunications (TMT), advanced manufacturing, and healthcare have emerged as frontrunners, with a significant focus on fostering new productivity paradigmsThe loosening of merger policies appears to have engendered an atmosphere conducive to market mechanisms, encouraging industrial consolidation and allowing enterprises to acquire premium assets more efficiently.

Despite the encouragement for industry consolidation, robust regulation remains a priority

Regulatory bodies are keen to monitor and control behaviors associated with shell companies and capricious cross-industry mergers aggressivelyLong-term stability and growth hinge upon a well-regulated environment that fosters genuine value creation rather than speculative trading.

Looking ahead, it’s imperative to swiftly enhance the supporting mechanisms surrounding these merger guidelinesM&A fund investors suggest facilitating the absorption and merger processes among listed companies as they often present better quality compared to their non-listed counterpartsThe relative ease of pricing based on existing market valuations can lead to a more seamless integration compared to private firmsUnderpinned by favorable policies and economic transformations, the M&A landscape among public companies is likely to thrive, driven by the push for supply chain efficiencies and consolidation.

This year, the CSRC has outlined plans to expeditiously formulate a regulatory framework aimed at curbing abusive behaviors by controlling shareholders and actual controllers while broadening the scope of oversight among listed companies to enhance operational performance

Last year alone, the CSRC, in tandem with local government agencies, conducted visits to 1,622 publicly traded companies, addressing pressing concerns experienced by these entitiesThis hands-on approach involves assessing challenges faced by firms in real-time, enabling authorities to provide tailored supportIssues that cannot be immediately resolved are placed into a monitoring database, ensuring timely interventions and increasing companies’ confidence in their developmental pathways.

Tian Lihui argues that these outreach initiatives send a clear signal of government commitment to supporting a high-quality capital market and enhancing the performance of listed companiesBy directly engaging with firms, regulatory bodies can offer specific assistance and foster improvements in corporate structure and governance, ultimately raising investment value and contributing to the broader goal of economic growth.

In terms of delisting practices, the CSRC plans to fortify continuous delisting mechanisms, encouraging diverse exit channels while expediting protections for investors within these processes