China securities regulator to launch preferred shares pilot programme this weekend: sources

BEIJING/SHANGHAI (REUTERS) - The China Securities Regulatory Commission is ready to launch a long-awaited pilot programme allowing listed companies to issue preferred shares, three sources with direct knowledge of the policy said, and could officially announce the new policy as soon as this weekend.

CSRC officials said earlier this week that conditions for China to launch the preferred shares for the first time are mature, and all listed and non-listed companies could apply for issuance. The CSRC did not respond to requests for comment.

Preferred shares pay fixed dividends and enjoy seniority over common stockholders in the event of bankruptcy. But in other respects they have limited impact on common shareholders.

They typically do not trade on the open market, carry no voting rights, and do not dilute net profits attributable to shareholders.

This could help revive China's stock indexes, which have been routed recently by a combination of bad economic news, tight liquidity, and the resumption of IPOs which has had a dilutive side-effect on valuations.

The Shanghai Composite Index fell below the psychologically important barrier of 2,000 on Monday after Chinese exports posted an unexpected 18 per cent slump in February, and is down nearly 6 per cent so far in 2014.