CHINA has unveiled a broad program aimed at boosting protection for small stock investors, a group that in recent years has been broadly skeptical of the nation’s turbulent equity markets.

    The government has promised to keep unsophisticated investors out of certain areas, boost corporate dividend payouts and increase voting rights for small shareholders.

    China’s policymakers have introduced a long list of reforms in recent years to clean up the country’s stock market, which is widely viewed as a casino in which investment returns bear little relation to the performance of the real economy.

    The State Council, or Cabinet, said in a statement posted on its website Friday that the government would create a system for classifying investors into groups based on their tolerance for risk and understanding of capital markets with unqualified investors barred from certain markets.

    Listed firms should disclose clear dividend payment plans and said that independent directors and brokers should express opinions about whether dividend plans harm the interests of smaller investors, the council said. The government also urged companies to conduct share buybacks when share prices drop below net asset value.

    In China’s policymaking process, the State Council often lays out broad principles, which specific agencies such as the China Securities Regulatory Commission may implement with detailed regulations.

    The State Council also said firms should improve voting rights for small investors, including allowing small investors to vote for directors and increasing use of online voting. Companies should be forbidden from restricting voting to shareholders whose holdings are above a particular threshold.

    The government also promised to enhance supervision of corrupt practices in the capital markets, including creating a database of reports of dishonest behavior by industry participants, which investors can consult in order to choose financial service providers.

    (SD-Agencies)