HA NOI (Biz Hub)— Big listed companies ruled by a "key man" or family are an unknown quantity and should be treated with caution, investment analysts say.

Director of advisory firm TNK Capital Partners Tran Vinh Du said depending too much on company founders who control up to 90 per cent of shares in the firm created a "key man risk", where the major shareholder made all the play.

This meant such companies could stand or fall on the decisions of a key men, in many cases without recourse to other shareholders or the advice of a third party.

Among many examples of "key man" ownership is Alphanam Investment Co (ALP), an investment arm of Alphanam Group.

The company listed in 2007, but key positions, including chairman and general or deputy general directors, are still held by chairman Nguyen Tuan Hai and his family.

Hai's family also holds up to 90 per cent of the company's shares.

Another example is Pomina Steel Corp (POM), with charter capital of over VND2.42 trillion (US$115.2 million), in which 90 per cent of the shares are owned by Do Duy Thai and his brothers.

And then there's property giant Hoang Anh Gia Lai Corp (HAG), whose chairman, Doan Nguyen Duc, holds 43 per cent of the shares.

Many chairmen argue that these companies have been built on their blood and tears, so they should retain such a high ratio of shareholding.

Andy Ho, managing director and head of investment at VinaCapital, said holding a majority stake is a good way for the founders to protect the company's value.

"As long as they add value to the company and shareholders, such businesses are still well worth investing in," Ho was quoted as saying in the publication Nhip cau dau tu.

However, such a large number of shares held in so few hands has caused some companies to rely heavily on bank loans.

The growth in debt at Pomina Steel Corp, for example, has increased over the years and its short-term borrowing last year jumped by 30 per cent.

According to analysts, some companies became listed to make them look more transparent, to facilitate their borrowing from banks.

Let TNK Capital's Du have the last say. He suggests that such listed companies should modernise their governance models.

"They can start by hiring high-level managers or, at least, they should have an independent board member to diversify opinions, "Du said. — VNS