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Why capital left idle?
A lot of investors who have joined in share auctions complain that equitised enterprises are slow in shifting to operate as joint-stock companies, and they have suffered losses because they cannot get dividends until the enterprises officially become joint-stock companies.
In early 2007, Ninh Binh Thermopower Plant made IPO, but it has only been operating as a joint-stock company since the beginning of the year. Investors were only able to get the interest rate of 1% on the face value of the shares they purchased from April 2007 to December 30, 2007.
PetroVietnam Finance Company (PVFC) has just released a notice on paying interest to its shareholders. Investors who won share auctions at the Hanoi Securities Trading Centre on October 19, 2007 will get interest on the money they spent to purchase shares, for 40 days, with the interest rate of 10% per annum. Investors who purchased shares at the additional share auction on December 14, 2007 will get interest for one day at the interest rate of 7.5% per annum.
In another case, Vietcombank now also has to pay interest to shareholders who have purchased Vietcombank shares. The interest rate is 15% per annum, and will be paid for April, when investors handed in money.
An investor who spent VND500mil to purchase shares of the Ninh Binh Thermopower plant complained that if the plant had become operational in mid 2007, shareholders would have got dividends for half of the year. However, as the process has been going slowly, investors’ capital has been left idle, unable to produce profit.
The interest being offered to shareholders proves to be modest compared to the dividends they could have enjoyed. Meanwhile, the interest is calculated on the face value of shares, not on the share market values, in some cases twice as much.
One year ago, when the stock market was hot, and could bring high profit to investors, no one cared about the lethargy of equitised companies in shifting operations. However, the situation is now quite different: the stock market keeps falling, while the VND is in serious shortage, and leaving capital idle proves to be a big waste.
A PVFC shareholder related that she spent VND280mil to purchase 4,000 PVFC shares, and she now can receive VND400,000 in interest on the sum of money. She said that the interest is not worthwhile and though the money is available has not arranged time to go get it.
Explaining the interest payments, the representative of an enterprise said that the enterprise was following the current laws in defining the interest to be paid to shareholders. Currently-applied Circular No 146 dated December 6, 2007 stipulates that if the time from the day investors hand in money to pay for shares to the day enterprises get operation licences is more than three months, enterprises will pay interest to shareholders based on the face value of the shares. The interest rate must not be higher than the interest rates of the same terms offered by commercial banks.
The representative also admitted that the interest investors can get for their money proves to be very small. Some investors get only several tens of thousands of VND and the time required to collect the interest is worth more than the amount they will receive.
VNN
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