Loss making firms to face delisting

Loss making firms to face delisting

Listed enterprises having incurred losses in three years in a row will be forced to delist stocks so that the quality of the local stock exchanges can be maintained, said Vu Bang, chairman of the State Securities Commission (SSC).

This year, some 15 enterprises have been forced to delist from the two local exchanges with over a half leaving the playground due to losses. Some enterprises applied for delisting due to private reasons while others infringed rules on information proclamation.

Bang said the quality of products on the stock market will be influenced if ailing companies are still allowed to continue trading.

Currently, there are several companies having losses exceeding equity or having posted up losses in three consecutive years. They will face delisting orders from the stock watchdog.

“If enterprises incur losses in several years but are afraid that delisting will influence investors’ interests, they can apply to list on the UPCoM, the market for unlisted public companies,” Bang added.

Under the Decree 58/2012/ND-CP, enterprises having demand to list from September 15 must have at least two years operating as joint stock companies by the time they ask for permission to list. They must have a return on equity (ROE) ratio of at least 5% in the latest year and have been profitable in the two proceeding years.

Hochiminh Stock Exchange requires applicants to have minimum charter capital of VND120 billion while the minimum chartered capital of listed firms on the Hanoi Stock Exchange is VND30 billion.

However, SSC recently has approved listing of Spilit Stone Company and VNECO4 Electricity Construction Company, which are capitalized at only VND25 billion and VND10.2 billion respectively, on the northern bourse.

The Saigon Times