Listed companies don’t want to increase chartered capital

Friday, April 25, 2008
The listed companies which have the chartered capital of less than VND80bil now have two choices, either raise chartered capital to VND80bil by February 2009, or list on the Hanoi bourse. However, most of them want another scenario, hoping that state management agencies will delay the deadline for the implementation of the regulation on VND80bil worth of chartered capital.

Nguyen Thi Lien Phuong, Chairman of the Seafood Company No 1 (SJ 1), said: “We don’t think of listing on Hanoi bourse because our business is now prosperous. I think state management agencies should not force us to raise chartered capital to VND80bil. The regulation should be imposed on newly listed companies only.”

Phuong said that in 2007, SJ 1 successfully issued 1.5mil shares to raise its chartered capital to VND35bil. The plan on issuing shares to raise chartered capital to VND80bil has not been implemented as the company still does not really need more capital. Moreover, the current conditions of the market prove to be not favourable enough for share issuance.

With the current chartered capital, the company’s management board has been under hard pressure to get profit. It needs to get VND9bil worth of profit, including VND7bil from the main business field, and VND2bil from other investments.

Ngo Duc Dung, Deputy Director of SJ 1 said that if the company must raise capital, it would use the money to implement the project on the trade complex and luxury apartments. However, to date, the project is still under negotiations with partners with no concrete agreement reached so far.

Dung said that the sum of VND39bil got from the share issuance in 2007 has been left unused.

In fact, listed companies absolutely do not want to issue shares to raise chartered capital at this moment if they don’t have a plan to use the capital to be mobilised effectively.

The Saigon Garment Company is planning to issue shares to increase capital to VND80bil as stipulated by the laws by the end of 2008. In order to make the share issuance plan feasible, the company has decided to sell shares to existing shareholders at VND12,000/share instead of VND20,000/share as initially planned.

Le Quang Hung, General Director of the company, said that the director board tried to persuade shareholders that the company needs to issue shares to mobilise capital for investment projects, otherwise, they would not accept the share issuance, though they know that the company will have to shift to list on Hanoi bourse.

Decree No 14 stipulates that in order to be eligible to list at the HCM City Stock Exchange, companies must have the chartered capital of VND80bil.

For the organisations which listed at HOSE before the decree became effective, if they cannot meet the above said requirements, they have two years to meet the requirements, or they will have to shift to list at the Hanoi Securities Trading Centre.(DTCK)