Illegal share issuance to face tougher penalties

June 30, 2008 | 18:10

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The Vietnamese equity market will be monitored more closely as the government said it would tighten new public companies share sales.

The market has had a rough ride in the past months

Prime Minister Nguyen Tan Dung said in Instruction 20/2008/CT-TTg issued on June 23, that public companies must register with agencies for new public share sales or private share offerings and illegal issuance would be halted and received hard punishments in line with the laws.

Recently, several public companies illegally issued new shares, but the market regulator State Securities Commission (SSC) could only hand out administrative punishments and failed to stop the violators from issuing the shares.

“The State Bank will now strictly manage the new private share offerings of commercial banks and financial companies. The Ministry of Finance will supervise insurance companies’ new share sales while SSC will oversee the rest,” said Dung.

Dung’s instruction also banned non-Vietnamese entitled enterprises from offering shares in Vietnam, except for those following the country’s international commitment roadmap. The prime ministerial instruction came on the heels of a series of public companies failing to fulfill their responsibilities on good governance and transparency.

Government bodies must prevent negative acts against the stock market and restore the confidence of local and foreign investors, Dung said, adding that all companies would have to register with a market regulator before going public.

Dung said state-owned enterprises were also banned from using government, investment development funds and capital to buy strategic shares of stock investment funds and securities companies. Individuals and organisations are also banned from holding illegal stocks and market regulators must build a market for unlisted stocks in 2008.

By Trung Hung

vir.com.vn

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