Ministry readies tighter disclosure rules

A draft circular expected to be issued formally by the Ministry of Finance later this year will strengthen disclosure requirements for larger public companies, based upon charter capital and the number of shareholders. 

Companies with charter capital of US$5.8 million and 300 or more shareholders will be required to release audited financial reports twice a year, within 45 days of the end of the reporting period (60 days for consolidated reports).

 To standardise reporting, the general secretary of the Vietnam Association of Certified Public Accountants, Bui Van Mai, also suggested that companies be required to give reasons for changes in equity. 

Listed companies with charter capital in excess of US$1.5 million but with fewer than 300 shareholders would only be required to disclose audited financial statements annually. 

Nguyen Son, head of the market development department of the State Securities Commission, said that different treatment for listed and unlisted public companies was appropriate for current conditions in Vietnam, which has a lot of unlisted public companies. 

Under the draft circular, unlisted public companies would only have to disclose audited financial statements once a year, although the commission would encourage companies to make quarterly reports. 

The circular also includes proposed restrictions on insider trading, forbidding company insiders from registering to buy and sell shares within the same reporting period. Registration time would also be reduced from 60 to 45 days. 

Robert Singletary, a legal expert who participated in the drafting process, said insiders should also register the number of shares and the price range to increase the transparency of their transactions. 

In another major provision in the draft circular, the Vietnam Securities Depository Centre would be required to release two additional types of information: transfers of shares by the company's founding shareholders and changes in the proportion of foreign ownership of the company. 

However, the circular lack details on what information and time frame will be necessary to comply with these disclosure requirements. The centre currently discloses information on market members, registration services, and the issuance of trading codes for foreign investors.