VietNamNet Bridge – The work of declaring death for securities companies would be accelerated to go at a highest ever speed, commencing from this month.
The “purification campaign” gears up
Just three days after the Circular No. 165 took effects, the stock market witnessed another securities company put under the special control by the watchdog agency. This spells that the company is likely to leave the market soon.
On December 4, the State Securities Commission (SSC) released the Decision No. 1058, stating that it puts SME Securities Company under the special control from December 4, 2012 to April 4, 2013.
SME Securities has become the first company put under the special control in accordance with the Circular No. 165 which took effects on December 1, 2012.
In the past, a company would be put under the special control only if it could not meet the requirements on financial safety indexes.
As a result, a lot of companies escaped from the SSC’s special control simply by neglecting their duties of submitting their financial reports. Since SSC did not receive reports to consider the “health” of the companies, it could not make any decisions which may cause negative impacts them. SME Securities was one of them.
This explained why only seven securities companies were put under the special control last year. The number of the companies was really modest, if noting that the majority of securities companies reported losses in the last many consecutive quarters. Especially, a lot of them reportedly incur losses for the last many years, deep in debts or have stopped operation in reality.
The seven companies include TAS, SBS, VIG, RUBSE, Mekong, Truong Son and HSSC. Of these, three have been suspended because they could not successfully improve the situation to escape from the special control.
However, the Circular No. 165 has set up stricter requirements to impose a stricter control over the performance of securities companies.
Under the new legal document, a company would be put under the special control if it does not submit the report on its financial safety situation for the two consecutive periods, or it does make public the information about the audited or checked finance reports about which auditing firms gave negative comments or refused to give comments.
With the new regulation, the duration to be put under the special control has been shortened to four months instead of six. This means that a company would be forced to suspend or stop operation if it cannot improve the situation after four months--since the day it is put under the special control and has the accumulative loss equal to 50 percent of its chartered capital or higher.
Vietnam’s stock market doesn’t need so many securities companies
Experts said if referring to the provisions of the Circular No. 165, nearly 100 companies out of the 105 licensed companies would be eliminated.
The Circular No. 165 with strict requirements is believed to be the door that many securities companies cannot go through.
Analysts have warned that the majority of the operational companies would disappear from the market, if the strict regulations are applied. However, the watchdog agency seems to keep its determination to cut down the number of the companies by 70 percent.
Especially, a senior official from SSC has revealed that the duration for the special control, which has been shortened from six months to four months, would be cut to one month or 10 days only.
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