Listing on foreign bourses remain a dream

Listing on foreign bourses turns out to be a more difficult task than previously thought. As for many Vietnamese businesses, listing on foreign bourses remain a dream.

To date, a lot of well known businesses, including VNM, PVF, VIC, ITA and HAG, plan to list their shares and seek capital from foreign bourses.

In the context of the weak demand on the home market and the limited cash flow to the stock market as a result of the policy on tightening monetary policies to curb inflation, businesses are automatically considering listing shares on foreign bourses. However, it seems that things are not going smoothly, because Vietnamese businesses have to go ahead with their listing plans while asking for permission from management agencies and waiting for guidelines from the agencies at the same time.

Three years ago, in October 2008, VNM, well known in Vietnam as Vinamilk, the leading dairy producer, was approved by the Singaporean Stock Exchange to list shares there. However, to date, VNM still cannot fulfill its plan. If VNM wants to be re-licensed, it only has to update its audited financial reports, while the company does not have to reinitiate the procedure from the start. However, Dau Tu Chung Khoan newspaper has quoted its sources as saying that in the upcoming shareholders’ meeting, VNM”s board of management will consult with shareholders about canceling the plan to list shares on foreign bourses. The main reason behind the reason reluctance of the company’s management board is that the company now does not have any big plans, therefore, it still does not have a high demand for capital.

VNM once took actions to slash the ratio of shares held by foreign investors from 49 percent to 46 percent in order to have three percent of shares offered to foreign investors when listing shares ithe Singaporean Stock Exchange. “Three percent is a really small volume of shares, while in order to list shares at Singaporean Stock Exchange, the company has to satisfy to many requirements. This is the reason why VNM has to abandon its plan to list on the bourse.

There have been more signs showing that VNM’s plan to cancel the listing on foreign bourses will become realistic. At the end of January 2011, VNM announced a plan to issue bonus shares to existing shareholders and issue three percent of shares to the public through auctions. If foreign shareholders buy up all the three percent of stakes, there will be no more “room” for foreign investors at Singaporean Stock Exchange in VNM.

In late December 2010, Vincom (VIC) released a shareholders’ resolution which approves a plan to issue 93 million shares, or 20 percent of VIC’s chartered capital. The corporation is targeting foreign institutions and foreign individual investors in Singapore. All the shares to be issued will be listed in the Singaporean Stock Exchange, slated for January 2011.

However, until now, when the first quarter of 2011 is nearly over, the path of Vincom to list shares remains tough due to the lack of a legal framework. Most recently, the corporation’s board of management has consulted with shareholders about listing on foreign bourses.

A source from VIC said it has chosen the institutions that will provide consultancy services to the company. Due to the differences between Vietnam’s and Singapore’s legal systems regarding the offering and listing shares of Vietnamese businesses on foreign bourses, VIC has contacted and received necessary guidance from competent agencies in Vietnam, including the State Securities Commission and the State Bank of Vietnam. However, VIC still has many things to do. Especially, it has to complete a prospectus to submit to the Singaporean monetary management agency.

PVF, PetroVietnam Finance Corporation, also has been pursuing the plan to list shares in the Singaporean Stock Exchange for a long time, but its plan has not made any progress. Nguyen Thien Bao, general director of PVF, said PVF plans to sell the stakes of PetroVietnam PVN in PVF (78 percent of the total chartered capital of five trillion dong) and to list on a foreign bourse. However, to date, the State Bank of Vietnam still has does not have any legal documents guiding domestic credit institutions to issue securities and list securities on foreign bourses. Only after being approved bythe State Bank will PVF be able to transfer its files to the State Securities Commission.

Besides PVF, PVN also plans to withdraw capital from some other enterprises, including PVD and PVI by selling stakes to foreign partners and listing shares on foreign bourses. However, the plan remains on paper.

To date, there is no standard legal document guiding the listing of shares on foreign bourses which can be applied to all enterprises. Therefore, the enterprises which plan to list shares on foreign bourses, all have to ask for guidance from management agencies (the State Securities Commission, the State Bank of Vietnam, the general Taxation Department and local planning and investment departments) for every specific case.

Nguyen Ngoc Canh, director of the International Cooperation Department under the State Securities Commission said that the listing of shares of Vietnamese enterprises will be stipulated in the Decree guiding the amended Securities Law. The decree is expected to be completed in May 2011 and take effect on July 1, 2011.

Tags: Vietnam business news, vietnam enterprices, Vietnam stock news