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Call for stricter listing requirements
Companies seeking to list shares on the HCM City Stock Exchange should have a minimum charter capital of VND120 billion (US$6.3 million) and a ratio of net profits-to-charter capital of at least 20 per cent for three consecutive years prior to listing.
This is the recommendation of the Viet Nam Association of Financial Investors (VAFI) to the State Securities Commission as it drafts amendments to the Law on Securities.
On the Ha Noi Stock Exchange, a company should have a minimum charter capital of VND40-50 billion ($2.1-2.6 million) and an average ratio of profits-to-capital of at least 10 per cent, VAFI proposed.
"Raising listing requirements will help remove unsound companies and diminish investor risk," said VAFI general secretary Nguyen Hoang Hai.
Under current regulations, in order to list on the HCM City exchange, a company must have charter capital of at least VND80 billion ($4.2 million) and have been profitable in the two years preceding the year of applying to list shares. In Ha Noi, the requirement is at least VND10 billion ($525,000) in charter capital and profits in the year preceding the year of registering to list shares.
In addition to stricter listing requirements, VAFI also proposed that the listings of any companies suffering losses for three consecutive years should have their listings cancelled.
Listed firms should also be required to profits on capital of over 15 per cent on the southern bourse and 10 per cent on the northern for the first five years after listing, Hai said, a regulation that would encourage newly-listed enterprises to uphold the quality of their corporate management.
With regard to securities investment funds, institutional investors should make up 30 per cent of shareholders.
There are currently 519 listed companies on the nation's two stock exchanges (229 on the HCM City market and 290 in Ha Noi). Of these, about 200 already have announced plans to increase charter capital in 2010.
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