My company is trying to pass a policy forbidding distribution of any application (even free) in any appstore for all developers.
Their reasoning is that "outside work activities create a conflict of interest". They don't want that "you use your spare time to work on your app, and once it takes off you quit your job" (quoting the Head of Development).
A few developers (myself included) have already said it was an abusive, pointless and most of all counter-productive policy (developers will actually be demotivated to work here under such control and to be denied of the freedom to distribute their project).
Personally, I think it is actually in the interest of the company to promote side projects (even commercial activities, if there is no conflict).
I'm also curious, is that common practice?
Needless to say, this is horribly, horribly stupid on so many levels... It may be worth trying to find out whether it's even legal in your jurisdiction.
Anyway and apart from that, if you can, find colleagues who feel the same, and take a stand against it. Try to explain to the management that this is a stupid decision for the company as well. Don't sign anything: A policy like that would probably have to be amended to your work contract to be binding. Chances are, the risk of losing good employees over this outweighs the security they think they get from it.
If there's really nothing that can be done, and you are very unhappy with this (I would be), consider looking for a new job.
As an afterthought, if the practice of limiting your employees' rights to this extent is clearly illegal in your jurisdiction, it could be that simply making them aware of this might stop this without any further trouble.