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Shareholders pressure KLS to remain in brokerage business
Kim Long Securities Company (HNX: KLS) Deputy Director Pham Vinh Thanh announced that, following a general shareholders meeting on March 19 that failed to achieve a quorum, the company would abandon plans to leave the brokerage business and concentrate on property and corporate investment.
The move followed a flood of complaints from shareholders.
The wave of negativity from shareholders forced the board to reverse their decision, Thanh said, adding that they realised it would take a long time to finalise the transition, and they still lacked a legal framework for the shift in strategy.
The Deputy Director said rumours had plagued the company's future business plan. The inquorate shareholders meeting had added to the gossip, as it was thought the delay had been a deliberate attempt by the board to reconvene the meeting at a later date, having secured more votes for its proposal.
"These circumstances have been severely and deliberately misinterpreted. However, we decided that we would abide by the views of shareholders in the best interest of the company."
After the business plan was announced, an estimated 60-70 of accounts opened in KLS were switched to other securities companies.
"In fact, we're still seeing new clients opening accounts," Thanh said, adding that almost all the existing clients used their own money to trade, and had not depended on leverage tools provided by Kim Long.
"Those who wanted to go, just went. Other clients have continued trading as usual."
Switching accounts between brokers was easy, so investors hadn't been in too much of a rush, he said, adding that the company would continue focusing on long-term investment by holding the regulated maximum stakes in companies to help them improve their corporate governance.
In the latest news released by the Ha Noi Stock Exchange, Kim Long Securities shares was put under warning from yesterday, due to the company's loss of VND172.8 billion (US$8 million) in profits last year. The warning would be lifted when the profitability improved. KLS yesterday closed unchanged at VND10,500 a piece.
Securities analyst Nguyen Quang Vinh said that the Kim Long news had only had a temporary impact on trading over one or two sessions.
"Kim Long's reversal excited investors, especially who held the KLS shares, in short-term. In the long-term, however, for KLS shares to advance, the company needs to release basic information such as first-quarter earnings data to prove that the company is able to remain a popular brokerage," Vinh said.
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