The Chinese government plans to make it easier for publicly-listed companies to buy back their shares, which could help firms stabilize their stock prices, Caixin reports. China’s stock markets have slumped nearly 20% since the start of the year.
The proposed revisions to China’s Company Law will relax restrictions on when companies can repurchase their shares in a number of ways. Companies will be allowed to set up treasury stock accounts to hold equities, and companies will be able to hold these repurchased shares for up to three years compared to just six months currently.
The China Securities Regulatory Commission claims that the change is necessary because the current rules have “prevented companies from repurchasing stock in a timely manner when the share price has fallen below its net asset value, an act that would help to stabilize market expectations and boost investors’ confidence,” according to a statement on the regulator’s website.