Entrepreneurs move to private firms

Tran Kim Thanh, chairman of the HCM City Stock Exchange-listed confectioner Kinh Do Corp, and his wife registered to sell all of their 14.5 million shares in the company this month.

Thanh explained he was merely consolidating his family’s holdings under the PPK one-member limited company owned by him to ensure more effective management.

He also planned to move his holdings in all other companies to PPK, he said.

This is becoming a popular trend among Vietnamese entrepreneurs.

In July, family members of Dang Van Thanh, chairman of Sacombank (STB), transferred almost 15 million STB shares to Thanh Thanh Cong Trading and Production Joint Stock Company, which is chaired by his wife Huynh Bich Ngoc.

The STB chairman also said the transfer from individuals to a company was meant to make their management more “professional.”

As far back as in 2009, Nguyen Duy Hung, chairman of Sai Gon Securities Inc, listed on HOSE as SSI, moved more than 14 million SSI shares he held to his own Nguyen Duy Hung Company.

Industry insiders said that such a move also enables the use of the shares as security to get loans easier and causes less negative impacts on other investors even in the case of divestment in future.

Besides, having corporate status while discussing capital contribution to a future joint venture or investment projects appears more professional, they pointed out.

Another major benefit is the savings on tax payments: while the tax rate on securities trading is either 0.1 per cent of the transaction value or 20 per cent of the profit, the corporate income tax is 25 per cent after deducting all kinds of expenses and costs, including operations, marketing, and even losses on investments.

The latter is usually likely to be lower. — VNS

Tags: Entrepreneurs, private firms