More than 50 per cent of shares currently listed on both of the nation’s stock exchanges do not meet new listing criteria stipulated in Decree 58/2012/CP-ND which takes effect on September 15.
However, to avoid disturbances to the market, the regulations will only apply to companies listed from September 15 on, and current listed companies will not be required to move their listings or delist.
Under the new decree, the minimum charter capital applied to companies wanting to list on the HCM City Stock Exchange will increase from the current VND80 billion ($3.8 million) to VND120 billion (US$5.7 million). On the Hanoi Stock Exchange, the minimum will rise from VND10 billion ($477,000) to VND30 billion ($1.4 million).
In addition, enterprises must have a return-on-equity (ROE) ratio of at least 5 per cent and incur no accumulated losses. Internal shareholders must also commit to hold a certain percentage of shares.
According to the newspaper Dau tu Chung khoan (Securities Investment), 175 companies listed on both exchanges, equivalent to 25 per cent of all codes, fail to meet these minimum charter capital requirements. Over 33 per cent of companies had ROE of below 5 per cent in the most recent fiscal year.
Seventeen companies are currently waiting to list on the HCM City exhange, seven of which have been approved in principle, while 49 firms have also filed for listings on the Hanoi exchange. Eighteen of these companies are not eligible under the new capital requirements.
“Companies will have to accelerate their listing dates or increase their chater capital to meet the new standards,” said Hanoi-based independent analyst Nguyen Viet Hung.
With these companies operating in such economically troubled industries as publishing, electrical engineering and building materials, Hung affirmed that raising additional capital would be difficult. However, higher listing standards were necessary to improve the quality of stocks and help restore investor confidence, he said.