Higher capital requirement for listing in the works

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The State Securities Commission plans to increase the minimum capital requirement for companies wanting to be listed on then nation's bourses in a bid to improve the stock market's quality.

Under a new draft prepared by the stock regulator, a company seeking to list on the Ho Chi Minh Stock Exchange must have a minimum registered capital of VND120 billion (US$6.16 million), while the requirement for Hanoi would be VND30 billion ($1.54 million).

Currently, a HCMC-listed firm must have a chartered capital of at least VND80 billion and one in Hanoi, VND10 billion.

Nguyen Hoang Hai, secretary general of the Vietnam Association of Finance Investors, who recommended the higher requirements in May, said that it was necessary to constrain poor-quality companies from listing to reduce risks for investors.

The new conditions would also promote the country's stock market investment environment, he said.

Hai also suggested the stock regulator classifies companies in accordance with their qualities to make the country's bourses more professional and make it easier for investors to consider investment options.

Vietnam's current stock markets are: the Ho Chi Minh Stock Exchange, the Hanoi Stock Exchange and UPCoM, an exchange for informally traded stocks.

Regulators should keep a look out for poorly performing listed firms that issue shares at random, Hai said.

As many companies that are already listed will not be able to comply with the new requirements, stock expert Pham Kinh Luan suggested that the regulators set a time-frame that gives them enough time to meet the updated criteria.

Companies listed on HCMC and Hanoi exchanges should not be forced to move to lower-quality bourses in case they fail to satisfy the new conditions, or they will rush to issue additional shares, flooding the market, he said.

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