While the Vietnam securities market is searching for a way to regain investors' confidence, recently many companies have been “de-listed” due to financial difficulties. It has led to the doubt of investors, especially small ones, as well as has blurred the securities market situation.
Small shareholders are legally small investors. However, they are mainly unprofessional ones, they buy and sell mostly due to rumours instead of any market standards. This fact has sometimes distorted the market when several people give false information, aiming to drive stocks’ price at their interests.
Vietnam securities market is still a young one and is finding the right development tract; therefore capital flow from retailed investors is one important factor to upgrade its liquidity. However, the investor segment has limited knowledge on securities and shareholders, which has significantly influenced market development.
For the last 2 years, Vietnam securities market has considerably low liquidity, the market development is not attractive enough for investors. In addition, recently many stocks have been de-listed. According to data of State Securities Commission (SSC), only from 2009 to 2014, about 40 stocks have been de-listed, 50 percent of which voluntarily. In the world, de-listing is an avoided issue for a public company, it happens only if the company faces difficulties and is forced to de-list stock. On contrary, in Vietnam, it is not the only reason for a company to de-list its stock.
Voluntary de-listing is clearly regulated on Decree 48/2012/ND-CP, that is “voluntary de-listing must be voted by at least 51 percent of shareholders and approved by at least 50 percent of retail shareholders”.
Considering over mentioned regulation, it is believed that “voluntary de-listing” is very difficult due to the requirement that a public company must have approval of at least 50 percent of retail shareholders to have its stock de-listed.
But the fact is different because the issue of listing or de-listing currently depends only on large shareholders/company. Moreover, there is not any law that regulates who “small shareholders” are. And the rate of 5 percent is abused by large shareholders/company to realise their interests as following:
In the 2005 Corporate Law, and even in amended 2014 Corporate Law (that will be approved in October 2014 and goes into life from 1st January 2015), there is not any regulation on small/retail shareholder. The rate of 5 percent is constructed so that shareholders must register and report to competent authorities from the time of possession; it is also a standard to self-nominate into the Board of Shareholders. In specialized law like the Securities Law, the rate of 5 percent classifies who is a large shareholder and he is required to public transaction information – therefore, if a public company wants to be de-listed, it will direct only some shareholders possessing under 5 percent of stocks per person to participate in the general meeting of shareholders and the de-listing will be approved easily.
As regulated, when a public company de-lists its stock in the transaction floor, its stock is still deposited and transferred into the UPCOM. However if the company does not register in the UPCOM, how could small/retail shareholders transact their stocks?
A de-listed company is not required to publicize information, which causes the fact that small/retail shareholders - the “company owners” do not know how their company is operating.
The issue of protecting small/retail shareholders still attracts attention of investors. In the development of Vietnam securities market, a clear classification of small/retail shareholders must be early considered by competent authorities.
Dinh Thanh
Vietnamese
