New law to tighten information disclosure

The amended Securities Law, approved on November 11, will come into force in July 1, 2011 and embraces new disclosure regulations applying to unlisted public companies.

Under the law, the companies will be forced to list on bourses within a year after going public and until listing they must disclose information in accordance with listing rules.

“The regulations are the first step to narrow the unofficial market and expand the official ones [markets],” said State Securities Commission (SSC) chief inspector Hoang Duc Long.

The law states public companies, both listed and unlisted, are forced to disclose their periodical information, extraordinary information and half-year financial statement.

Information disclosure will be regulated in reference to the companies’ levels of publicity.

“Big companies which do business in many sectors will have to disclose information more frequently than smaller ones,” said SSC chairman Vu Bang.

He said lawmakers were quickly drawing up detailed guidance documents for information disclosure.

Unlisted public companies in Vietnam are trading their shares on the over-the-counter (OTC) market, which was only officially formalised   in 2009 with the establishment of the UpCom market.

Yet the  UpCom market is reported not able to handle the huge amount of existing public companies.

Of the 4,000 shareholding companies, only around 700 have been listed on official bourses.

Dozens of public companies, including big state-owned groups and corporations, have taken years to list on bourses after initially issuing shares. Bao Viet and Vietcombank made their initial public offerings (IPO) in 2007, but only listed in 2009.

Unlisted companies’ lack of transparency is increasingly a problem deteriorating OTC market’s quality.

“Those unlisted companies’ lack of transparency has damaged investors’ confidence in the market,” said Hoang Minh Son, who runs the sanotc.com, a locally reputed online OTC stock trading platform.