Vietnam plans to ask all companies listed on the country's main stock market to raise their registered capital to 80 billion VND (5mio US$) from 10 billion VND currently.
Authorities will soon issue a new regulation to implement this requirement, Do Huu Phuc, spokesman at Ho Chi Minh City's Securities Trading Center (HSTC) said.
"Vietnam will build the HSTC into a major stock exchange for large companies to list their shares," Phuc continued.
Currently, 106 companies are listed on the HSTC, which was launched in July 2000, and 65 of them have a registered capital below VND80 billion.
"The authorities are proposing to give them two years to raise their capital, and the government is expected to approve this proposal soon," Phuc noted.
He added that companies which fail to meet the requirement by the deadline would be moved to Hanoi's Securities Trading Center, or HASTC, which is the country's official over-the-counter market.
Phuc said the move was part of general plans to improve standards at Vietnam's stock markets. The authorities have already announced new rules that require listed companies undergo regular audits.
In addition to changing the criteria for listing on the HSTC, a State Securities Commission official said the authorities will develop the HASTC as the stock market for medium and small companies. Currently, it lists 87 company stocks with a total market capitalization of 4 billion US$.
"HASTC will become the OTC market for medium and small stocks, and also the market for all government and corporate bonds," the official said.
The proposal was welcomed by market participants.
Increasing the registered capital of listed companies is an indication of the government's determination to build up and further develop the stock market, according to Nguyen Duy Hung, a director at Saigon Securities Inc., the largest brokerage firm in Vietnam in terms of capital.
In addition, as the value and status of the stock market grows, the government needs to work to protect investors with the application of stringent regulations, according to Vuong Quan Hoang, a director at InvestVietnam Inc., an investment consultant firm based in Hanoi.
"To attract more foreign investors, market regulations will need to be implemented more stringently," he said.
By then end of 2006, the two stock markets had a total market capitalization of $14 billion, equivalent 22.7% of Vietnam's gross domestic product.
Source: Thanh Nien
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