Share issuance is widely chosen by businesses to mobilise capital, but many bottlenecks need to be removed.

In mid-December last year, at a business forum, Nguyen Quoc Ky, Chairman of Vietravel's Board of Directors said that the company’s capital increase plan had been submitted to the management agency for five months but wasn’t resolved.

"Investors are ready, but the company is still waiting for the procedure in vain,” he said.

It was not until February 24, 2023, that Vietravel announced that it had completed the procedure to increase charter capital from VND173 billion to VND293 billion to implement the business strategy in 2023. Specifically, the company issued 6 million shares to swap debt of VND168 billion for Hung Thinh Corporation, with a conversion rate of VND28,000 per share and 6 million shares for investors holding important positions at Vietravel.

Gemadept Joint Stock Company (GMD) approved the plan to increase capital at the 2022 annual general meeting of shareholders. On December 27 of last year, there was a resolution to adjust the issuance plan and the application file for buying rights to existing shareholders. But so far, there has been no announcement of completing the capital increase dossier.

Gemadept plans to offer more than 100 million shares at the price of VND20,000 per share to existing shareholders at a ratio of 90:30. The mobilised capital is expected to increase capital contribution to Nam Dinh Vu Port Joint Stock Company, implementing the investment plan to expand phase 2 of this port and contribute capital to inland port projects.

Some businesses also said that the capital increase dossiers, approved from the 2022 general meeting of shareholders, were still stuck at the State Securities Commission (SSC). In previous years, the capital increase dossiers will be completed in the second half of the year or early in the first quarter of next year.

Some businesses reported that there was a change in personnel at the SSC and that the Committee was working more closely on the approval of capital increase documents compared to the previous period, especially with documents for issuing new shares. Enterprises are often required to add additional documents during administrative procedures.

However, the slow approval of dossiers to increase capital sometimes is due to the fault of the enterprise itself. For example, Sao Mai An Giang Joint Stock Company withdrew its application for a capital increase in 2022 because it had to explain the payment of dividends.

The resolution at the general meeting of shareholders approved the payment of dividends in cash, but the enterprise paid in shares, so the management agency was required to re-organise the general meeting of shareholders, to ask for opinions of shareholders on the new dividend payment plan.

Truong Thanh Energy and Real Estate Joint Stock Company (TEG) offered shares to the public in the form of issuance to existing shareholders and auction of shares. However, investors who paid money to buy shares from September 2021 would not be able to sell shares until May 2022. This caused damage to investors, because the stocks were traded during the strong correction of the market.

Issuing shares is an important method of raising capital for businesses, especially in the context of a congested bond channel and more difficult access to bank loans and higher interest rates. But in order to raise this capital, not only the efforts of listed companies are needed, but also more active support from the management agency.  VNS