Securities companies have to increase their chartered capital to VND300bil by March 2009 in order to be eligible to offer five business services. This seems to be a tall order with the prolonged falls of the market.

Securities companies have to increase their chartered capital to VND300bil by March 2009 in order to be eligible to offer five business services

The State Securities Commission (SSC) has asked the MOF to extend the deadline for securities companies to raise their chartered capital due to the current state of the market.

Recently, the Ministry of Finance (MOF) agreed to extend the deadline for listed companies on the bourse to raise their chartered capital. Listed companies on the HCM City Stock Exchange will have to increase their chartered capital to VND80bil, while companies listing at the Hanoi Securities Trading Centre have to increase their capital to VND10bil by early 2009.

According to SSC, the 55 securities companies licenced prior to January 1, 2007 are the ones that have to raise their capital. Of these 55 companies, only 10 have the chartered capital of VND300bil, while many others have low chartered capital levels. Vietnam Securities Company, for example, had the chartered capital of VND9bil at the time of licencing, while Viet Securities Company VND9.7bil.

The Vietnam Association of Securities Businesses also submitted a proposal to relevant agencies on extending the deadline for raising chartered capital to VND300bil.

A representative of Anpha Securities Company said that it is now very difficult to increase capital as requested, and that securities companies should be allowed to delay the capital increase as a necessary support for the companies in the current difficult period.

The director of another securities company said that stabilising the market should be seen as the top priority now, while other works are less important.

He added that it would be not so difficult for securities companies belonging to banks to increase capital, but it would be a really big problem for joint stock companies.

Meanwhile, Le Ho Khoi, Chairman and General Director of Trang An Securities Company, said that in order to respect the articles of the Securities Law, securities companies should consider reducing the number of business operations. (Under the current laws, securities companies which carry out all five types of business operations must have the chartered capital of VND80bil now and VND300bil by March 2009). Trang An, for example, is considering abandoning guaranteeing securities issuances. Under the current laws, companies must have the minimum chartered capital of VND165bil to provide this service.

Khoi also thinks that in the current difficult period, it is more important to strengthen the market and restore investors’ confidence than to have securities companies increase capital.