Market value management in mainland China: what Guideline No. 10 asks of listed companies

On 15 November 2024, the China Securities Regulatory Commission issued Listed Company Regulatory Guideline No. 10 — Market Value Management, effective on issue. The guideline has 15 articles covering four areas: what market value management means, who is responsible for it, special requirements for two groups of companies, and what is prohibited.

A definition built on company quality

The guideline asks listed companies to start from the quality of the business: improving operating efficiency and profitability. On that basis, companies may use lawful tools to help their investment value reflect that quality, including mergers and acquisitions, equity incentives and employee share schemes, cash dividends, investor relations management, information disclosure and share buybacks.

Clear responsibilities

The board is expected to give weight to investor interests and returns in major decisions. The chair is to drive and coordinate the work; directors and senior management are to take part; the board secretary is responsible for investor relations and disclosure. Controlling shareholders may support market confidence, for example by increasing their holdings.

Two groups with specific duties

*Major index constituents* must adopt a formal market value management policy. Compared with the September 2024 consultation draft, the final version extended this to constituents of the CSI A500 and the ChiNext mid-cap 200 indices.

*Companies trading below net asset value for a long period* must prepare a valuation enhancement plan, approved by the board and disclosed. The plan must be clear, specific and executable, and avoid wording that could mislead investors. Its effect must be reviewed at least once a year. Where such a company's price-to-book ratio is also below its industry average, it must explain progress on the plan at its annual results briefing.

What is prohibited

The guideline explicitly prohibits illegal or non-compliant conduct carried out in the name of market value management.

What it means for IR

For many companies, market value management is now a board-level responsibility with disclosure attached. Investor relations and information disclosure are named as core tools. Companies that already know how investors see them — and where the perception gap lies — are better placed to write a credible plan and report on it.