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Delisting shares – a new trend on the stock market
The shares of many enterprises have been delisted from the stock market recently. Experts have warned this could be the start of a delisting wave which would be stronger in the near future.
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Mekophar, a pharmacy firm, decided to delist from the HCM City Stock Market, becoming the first listed company that spontaneously left the bourse in the history of the Vietnamese stock market.
In 2011, Mekophar sought the permission from the HCM City Planning and Investment Department to carry out one more type of business – wholesaling and retailing drugs. However, the proposal was refused by the department, who cited the current laws as saying that a foreign invested enterprise is not allowed to do the trade.
The company then lodged a complaint to many relevant agencies, asking to reconsider the current regulations to facilitate the company’s operation. However, it finally decided that delisting shares was the best way it should follow in order to obtain its goal – adding the functions of drug wholesaling and retailing into its business certificate.
The HCM City Stock Exchange then released a notice that 10,115,932 shares with the face value of over 101 billion dong would be delisted from July 12, 2012.
Prior to that, the shareholders’ meeting of the Construction Joint Stock Company No. 11 (V11) also decided to delist its shares from the bourse in order to gather strength on the restructure process.
However, before the company fulfilled necessary procedures to leave the bourse spontaneously, it was forced by the watchdog agency to delist shares, because the auditing firm could not show its opinions about the 2011 finance report of the company.
V11’s total revenue was 320 billion dong in 2011 which made it incur the loss of 31 billion dong. The shareholders’ meeting then approved the business plan for 2012 with which the company’s total turnover would be 300 billion dong and continue incurring the loss of 22 billion dong.
Delisting shares from the bourse, either spontaneously or unwillingly, has become a popular story. The delisted companies nowadays do not meet difficulties or face the opposition from shareholders any more.
However, it’s obvious that many of the enterprises which plan to delist from the bourse are the ones which have been incurring losses. They anticipate the decision by the watchdog agency to force them to delist shares, and they would rather delist themselves before they are forced to do that.
In fact, spontaneous delisting is not a new story at all. In April 2011, SGT, whose President is Dang Thanh Tam, a well-known businessman listed in the top three stock billionaires, also considered delisting shares after having unsatisfactory business performance.
At that time, Tam stressed that delisting was a thing that needs to be done for the survival of the enterprise.
In 2011, when SGT considered the possibility of delisting shares, it incurred the loss of 138.8 billion dong. SGT continued taking a loss of 46.5 billion dong in the first quarter of 2012
Apart from the enterprises which spontaneously decided to delist shares because of the poor business performance, the case of Descon (DCC) has caught the special attention from the public.
In early 2011, Descon stirred up the public when replacing the board of directors with new members. Prior to that, Descon asked for the permission of shareholders on delisting shares.
Finally, Descon has forced to delist shares for the violation of the regulation on information exposition. A question has been raised that if Descon deliberately did not expose information to be able to delist shares – the thing that the big shareholders of Descon wanted?
vietnamnet
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