Securities companies languishing for the death
VietNamNet Bridge – Incurring big losses and heavy debts, securities companies still have to spend money to maintain their operation until the day they are allowed to “die.”
Stretching out on deathbed
The decision to dissolve the Cho Lon Securities Company CLS was declared in the shareholders’ meeting’s resolution in March 2013.
The resolution said the company would have six months to solve existing problems, terminate contracts and settle debts, fulfill tax duties and payment to workers.
Nguyen Van Liet, General Director of CLS, said the company has settled the problems, but it still cannot declare the death, because the procedures of transferring 1,000 clients’ accounts to other securities companies have not been fulfilled yet.
These are the accounts of individual clients, where there are only several accounts left and the owners do not intend to go to the company to follow the procedures.
As a result, CLS still cannot terminate its membership status at the Hanoi and HCM City Stock Exchanges. What it can do now is waiting for the instructions from the Vietnam Securities Depository Center.
The same thing has been happening with Au Viet Securities AVS. The company has stopped providing the brokerage service for nearly one year, but it has just received the decision on stopping the service.
Doan Duc Vinh, President of AVS, said AVS still has to follow the formalities relating to VSD. It now still has to spend money to keep the personnel of less than 10 workers to follow the procedures. The work is expected to be completed by the end of the year.
Incurring losses, but securities companies still have to live
Though the securities companies have stopped operation and made no more revenue, they still have to spend money to keep their labor force and to maintain the membership fee at VSD and the two Hanoi and HCM City stock exchanges. The sum of money is between VND100 million and VND200 million a month.
Meanwhile, CLS by the end of 2012 had incurred the accumulative loss of VND50 billion. AVS had reportedly incurred the loss of VND150 billion, while it shares had been delisted by that time. The company’s shares have seen the prices falling down dramatically to the level equal to 2/10 of that at the establishment moment.
Liet said he has been under a hard pressure when the company’s shareholders continuously call and ask when they would get back their money. They have repeatedly urged to fulfill the administrative procedures, so that they can get the money back, though the value of their assets have been halved.
Vinh also said the founding shareholders of the company have got tired of making investments in securities. They want to get the investment money back to pour into other investment channels.
Besides CLS and AVS, which have filed for the business dissolution, a lot of other securities companies have also quitted the market or suspended their operation. These include the Dong Duong Securities, Sao Viet, Hanoi, SME and Truong Son.
Dr. Le Tham Duong, the Business Faculty Dean of the HCM City Banking University, explained that the securities companies still cannot declare the death because of the shortcomings in the regulations.
However, Duong said that the problems need to be settled as soon as possible instead of waiting for the legal framework to be perfected. “This is a part of the crisis administration which requires timely solutions,” he commented; adding that the management watchdog agencies need to make reasonable instructions to solve the problems.