The Purpose of Insiders

 

This option does not mean that previous voluntary delisting was not quality. But, looking at different aspects, voluntary delisting of most companies in previous years came from intentions and reasons which were hardly persuasive to all shareholders. Vu Bang, Chairman of the State Securities Commission (SSC), said, "This comes from short-term views on interests of a group of major shareholders rather than benefits of a majority of shareholders (a company can be delisted in case 65 per cent or more of shares with voting rights agree.)”

 

For example, the share delisting of Saigon Telecommunication & Technologies Corporation (SGT) and Saigon - Quy Nhon Mining Corporation (SQC) raised the trend of voluntary delisting. But, no one knew for sure why these companies chose to delist although they explained that “undervalued share prices cause the companies to lose points in the eyes of partners and fail to reflect their statures.” These arguments have become a common rationale for later share delisting.

 

A series of companies then announced delisting plans like Descon (DCC), Saigon Beverages Joint Stock Company (TRI), Mekophar Chemical Pharmaceutical Joint Stock Company (MKP (MKP), Interfood Shareholding Company (IFS), Construction Joint Stock Company No 11 (V11), and Song Da 27 Joint Stock Company (S27). After SGT and SQC, delisted companies also gave a few specific reasons. Descon was forced to be delisted by the Hochiminh Stock Exchange (HOSE) for information disclosure violations. TRI went bankrupt. MKP left the market with foreign ownership ratio disputes. IFS had losses in excess of share capital.

 

In 2013, some voluntary delisting cases have better reasons because they sound not for short-term interests of majority shareholders.

 

Alphanam Investment Joint Stock Company (ALP), the driver to propel its board chairman to the list of 20 wealthiest people on the stock market, applied delisting applications for various reasonable motives like accrued losses (but not reach the limit of three consecutive years of losses), merger with other companies, shrinkage (due to loss-making financial investments). The company’s general shareholder meeting, set to take place late May, will vote for this issue. In fact, huge operating losses of many financial investment companies and real estate companies force their boards of directors to reconsider the “eating dried fish and patching the net” strategy or they spend on their “keepings” and fixing mistakes to wait for better days.

 

Any motives of ALP are reasonable to a certain extent. Alphanam Chairman Nguyen Tuan Hai did hide his expectation for the delisting: ALP shares are excessively undervalued by investors. However, it is quite easy to see that the real driving forces for the delisting of Alphanam are restructuring efforts and changes in operation strategies. Even, if personal reasons are counted, his aspiration comes from his responsibility to the company: Defend achievements and protect resources.

 

The case of Minh Phu Seafood Group Corporation (MPC) is not as clear as ALP as its leadership did not reveal real reasons for the delisting accept for the admission that this came from the request of a big foreign shareholder. But, based on the planned capital increase of Minh Phu - Hau Giang Company, a subsidiary of MPC, from VND600 billion to VND1,000 billion from new members, with plans of setting up Shrimp Research Institute with an initial investment capital of US$1 million sourced from the company’s R&D Fund that the board of directors intends to submit the 2013 general shareholder meeting, we can see that MPC perhaps are in need of capital, and based on the current shareholding structure (founding members and managers are holding controlling shares), the capital increase plan for its business plans is hardly feasible if it lacks external forces.

 

Thus, according to many investors, MPC’s delisting is also a long-term development plan. Indeed, in some cases, listing is a good “label” for a company to get better external forces.

 

According to various sources collected by the Vietnam Business Forum newspaper, not a few companies are planning to delist shares at the request of foreign investors.

 

Although the stock market has not changed much, inside market movements are changing considerably. These movements come from companies. The demand for delisting and restructuring has become a right option in replacement of short-term interests of a group of big shareholders as well as barriers erected to prevent unwanted takeovers. It is time the market had a more positive look on voluntary delisting. In the perspective of market regulators and market makers, companies and investors are expecting authorities to have regulations to prevent massive delisting which may cause chaos on the market, and create the legal framework and new playground for delisted companies because they will become good quality goods for the market in the future.