2026 National Two Sessions | CPPCC National Committee Member Feng Yidong: Multiple Measures Should Be Taken to Optimize the Dividend Distribution System for Listed Companies

CNR Beijing, March 11 — (Reporter Fan Rui) During the 2026 National People’s Congress, Feng Yidong, member of the Chinese People’s Political Consultative Conference and General Manager of Zhongtai Securities, told CNR Finance that he continues to focus on optimizing the dividend distribution system for listed companies.

Member of the Chinese People’s Political Consultative Conference and General Manager of Zhongtai Securities Feng Yidong (photo provided by interviewee, CNR)

“In recent years, A-share listed companies have shown a positive trend of ‘high total dividends, high dividend yields, and strong continuity.’” Feng Yidong pointed out that, according to data from the Shanghai Stock Exchange, Shenzhen Stock Exchange, Beijing Stock Exchange, and the Listed Companies Association, cash dividends from A-share listed companies have exceeded 2 trillion yuan for four consecutive years, setting new records. However, analysis of disclosed data shows that some large dividends lack genuine profits and cash flow support, and some are paid using borrowed funds to shareholders.

“This behavior is essentially one of the ways major shareholders transfer creditor funds to themselves, which severely harms creditors’ interests, weakens the company’s sustainable operation over the long term, and may even trigger bankruptcy risks, indirectly damaging minority shareholders.” Feng Yidong believes that the dividend system should be optimized in three ways.

First, make cash flow an important criterion for debt repayment ability. Based on documents like the “Regulations on the Supervision and Administration of Listed Companies (Draft for Comments),” specific practical rules should be introduced to turn the principle of “considering debt repayment ability” into standards based on cash flow, review procedures, and accountability mechanisms. Establish classification and quantitative constraints—for example, for companies with high debt ratios, require that after dividends, cash reserves should not be less than the new interest-bearing debt for the year; for companies with moderate debt ratios, require that cash reserves after dividends should not be less than the interest-bearing debt due the next year.

Second, improve the checks and balances of rights and responsibilities between creditors and the board of directors. For listed companies with debt ratios exceeding a certain threshold (e.g., 50%), establish a preventive creditor meeting system, giving creditors prior voting rights on major dividend decisions. Strengthen the fiduciary duties and joint responsibilities of directors toward creditors, requiring the board to produce written debt repayment test reports and responsibility commitments when proposing dividend plans, allowing creditors to hold negligent directors directly accountable.

Third, enhance the proactive protective functions of restrictive clauses in debt financing. Encourage bond issuance documents to include dividend restriction clauses, and give preferential treatment to bonds with such clauses during issuance. Based on the “Investor Rights Protection Reference Text,” normative documents should specify financial indicators that restrictive clauses should include, such as maximum leverage ratio before dividends and minimum cash-to-short-term debt ratio after dividends, with reference ranges provided for different industries.