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Slack information exposure, the biggest problem of public companies
50% of 825 public companies were late in submitting finance reports in 2007. Only 33 companies listed at the HCM City Stock Exchange said they were interested in a competition which aimed to select the best annual finance reports. Public Vietnamese companies really do not want to expose information.
A very important event is expected to take place in the third quarter of 2008: the trading floor for public companies’ unlisted shares (OTC) will debut and be run by the Hanoi Securities Trading Centre (HASTC).
40 public companies have been invited to put their shares into transaction on OTC trading floor, but only 11 have registered for share transactions, mostly securities firms, banks, finance companies and insurers.
Under the current laws, public companies are companies which have shares offered to the public, and their shares are held by at least 100 shareholders. Public companies must have the minimum chartered capital of VND10bil.
According to the Vietnam Chamber of Commerce and Industry VCCI, Vietnam now has 10,000 joint stock companies, while only 988 of them had registered to the State Securities Commission as public companies by the end of June 2008.
Dr Sundar Venkatesh, Lecturer at the Thailand-based Asian Institute of Technology AIT, said that while other countries all have specific regulations on standards in corporate governance which limit violations of shareholders’ benefits, Vietnam still does not have such regulations.
There are no legal regulations which stipulate the obligation of exposing information and a related mechanism, and there are no legal regulations which stipulate the punishments for violations of the information exposure mechanism. A lot of companies have been found as not reporting securities issuances to management agencies.
A lot of problems still exist in information exposure by public companies. A lot of finance reports are being made in a perfunctory manner, and shareholders do not understand the reports after they read them.
50% of 825 public companies were late in submitting finance reports in 2007. Only 33 companies listed at the HCM City Stock Exchange said they were interested in a competition which aimed to select the best annual finance reports.
Why don’t public companies want to expose information? Because leaders of the companies do not understand that giving information to the public is a responsibility of public companies.
Meanwhile, leaders of some public companies say that the problems in the current mechanism on information exposure make them hesitate to provide information.
In fact, many investors do not really care about the information of the companies in which they are shareholders. Analysts say that most investors now on the stock market are ‘surfing’ on investments, which means they are just making short-term investments. That explains why they do not care about companies’ long-term business plans and find it unnecessary to read finance reports.
Dr Sundar stressed that information exposure is a must, because this is the rule being followed all over the world.
VnMedia
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