HA NOI (Biz Hub) — Healthy and transparent companies could still eschew difficult economic conditions by raising capital through stock market flotations.
This was heard at a Ha Noi conference jointly held by the State Securities Commission and Ha Noi Stock Exchange on Thursday.
At the conference, deputy director of the State Securities Commission's Department of Issuance Management Bui Hoang Hai said securities offerings had slowed down in recent years after their 2007-08 peak.
SSC statistics showed that in the 2007-08 pre-crisis period, the total value of shares issued hit VND100 trillion (US$4.76 billion), in comparison with the modest sum of VND1.7 trillion ($809.5 million) seen in the first seven months of this year.
Hai pointed out that market difficulties and share values slipping below their offering prices were among the main causes.
Many companies' registry documents for shares issuance also failed to meet requirements and had to be rejected, he added.
At the conference, many companies said now was not the right time for listings or securities offerings, especially in light of many listed companies leaving stock exchanges due to losses or difficulties in raising capital.
Director of the Ha Noi Stock Exchange Tran Van Dung agreed that cash flow problems remained for listed companies in current conditions.
However, healthy companies with transparent management had lots of opportunities to raise capital from securities offerings, Dung said.
He noted that Ha Noi–listed companies raised a total of VND34 trillion ($1.62 billion) in the 2010-12 period, doubling the figure from 2005-09.
Hai added that the stock market had seen recent improvements as the economy began to show signs of a revival.
"It is time for unlisted enterprises to put their securities offerings into consideration," he said.
To create advantageous condition for companies, the SSC proposed applying restricted securities auctions to those which failed to fulfill offerings requirements.
Vice Director of the SSC's Inspection Department Vo Thanh Huong said Decree 108/2013/ND-CP, which came into force yesterday, would tighten punishments for slow listings.
Accordingly, joint stock companies which do not implement securities offerings within one year will be fined between VND100-150 million ($4,700-7,150).
This aims to hasten joint stock company listings and enhance transparency.
Statistics showed there were 3,000 joint stock companies nationwide, however, less than 1,000 were listed. — VNS