Public companies try to dodge registration

VietNamNet Bridge – The plan to reinforce control over the OTC (over the counter) market initiated by the State Securities Commission (SSC) is experiencing difficulties as companies do not want to register.

Mr Huy, the director of a company specialising in trading telecommunications equipment, shrugged his shoulders when asked whey he had not registered with SSC.

“What for? I will have to follow too many rules, while I will not have any benefit. I don’t want to expose my information; I don’t want to have my financial reports audited,” Mr Huy said.

Mr Huy’s company is just one of ten thousand public companies which are required to register with competent agencies as required by the Securities Law.

Mr Huy brought up a lot of problems, which he described as “troublesome”.

“Now we have 120 shareholders in our company, and I have to register. But what will happen if the number of shareholders goes down to 50 when the shareholders sell their shares?” he questioned.

Associate Professor, Dr Tran Ngoc Tho from the HCM City Economics University has recently conducted a survey of 235 enterprises (most of which are joint stock companies and state owned enterprises which will be equitised, operating in the fields of banking, insurance, manufacturing and trading). The surveyor asked the enterprises to talk about the difficulties they are facing by becoming public companies.

The survey showed that joint stock companies do not want to become public companies as the benefit they can get cannot offset the losses they suffer when becoming public companies.

Enterprises said that they didn’t want to fulfill the duties on information exposure; they couldn’t comprehend the regulations on protecting investors; and the current tax scheme was not equal.

The Ministry of Finance, though being anxious about the tardiness in public companies’ registration, is still trying to persuade public companies to register, rather than forcing them to do that. To date, only a few corporations and agencies have sent the lists of public companies under their management to SSC.

Decree 36 on the punishment of violations in securities related issues stipulates that public companies may be imposed with the fine of VND5-20mil if they don’t register. However, an expert said that the State should have suitable policies to encourage, not to compel them.

Dr Tho from HCM City Economics University said that in order to encourage companies to operate as public companies, the Government should enact new suitable policies.

Firstly, joint stock companies and equitised companies should be asked to apply a modern corporate governance method so that the companies can get adapted soon when beginning to operate as public companies.

Secondly, the Government should enact a decree, guiding the declaration of information.

Thirdly, there should be regulations on corporate trading, merging and acquisition, and regulations on investors’ protection, especially small investors.

(Source: Tuoi tre)

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