Time draws nigh for HOSE companies
February 3 is the deadline for companies listing on the HCM City Stock Exchange (HOSE) to increase their chartered capital to at least VND80bil, and for those listing on the Hanoi bourse to at least VND10bil. What will happen if companies cannot reach the required levels of capital?
Raising capital not easy at all
According to Hoang Thach Lan, Head of the Analysis Division under SME Securities Company, the business reports for the first 11 months of the year showed that only several listed companies got satisfactory results (fulfilled or passed yearly plans).
However, these are all big companies which do not have to increase capital to meet the new requirements of the stock exchange. The companies which have to increase capital are mainly small companies which have had financial problems. Therefore, analysts have every reason to doubt the ability of small companies to increase capital.
As for HOSE, there are two groups of listed companies, the one of companies with the capital of VND20bil each, and the other of those with VND60bil. It seems to be impossible for members of group 1 to increase chartered capital by 3-4 times. Meanwhile, the second group still has opportunities to increase capital.
In theory, enterprises can increase capital by issuing shares to existing shareholders. However, in the current gloomy period of the stock market, this channel proves to be less feasible; moreover it takes time (6 months on average) to fulfill procedures.
Enterprises can also issue shares to their partners, which takes less time. “If enterprises’ business is good, partners are ready to contribute capital,” Lan said.
Changing bourses?
It is highly possible that the small companies which did not have satisfactory business results in 2008 will have to move their shares from HOSE to the Hanoi bourse, which sets lower requirements on chartered capital.
However, the question is still being asked: What will happen to the companies which have less than VND10bil in chartered capital, i.e. they cannot meet the requirements set by HOSE or the Hanoi bourse?
The answer is that if UPCom (the market of unlisted public companies) is completed by February 3, the companies will be listed on that market. However, there is no indication that UPCom will become operational by then.
People are trying to predict the scale of the two bourses in the time to come as it is expected that a lot of companies will move from HOSE to the Hanoi bourse.
One scenario being discussed is postponing the deadline for raising chartered capital by three months. Decree 14 stipulating the chartered capital level of listed companies also says that the Ministry of Finance, after considering the market’s development, can adjust the capital level by 30% (+/- 30%) with the government’s permission.
As such, there will be three scenarios for the companies which cannot raise capital as required 1/ the deadline for raising capital will be delayed 2/ required capital will lowered by 30% 3/ the companies will have to list on another bourse.
HOSE now has 49 listed companies which have the chartered capital of less than VND80bil (14 companies have the chartered capital of over VND60bil, and 18 companies less than VND40bil). HASTC now has six companies which have the chartered capital of less than VND10bil.
Lao dong
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