The situation that enterprises inertly pay dividends to investors as well as continuously mobilise capital by issuing a huge number of shares is one of the reasons that has made stock market less attractive over the past time. The question is: who will be responsible for gaining justice for investors, whose dividends payment terms are always extended, and whose issuing bonus shares become “penalty” shares because of price depreciation.
A trend of postponing paying dividends, bonus shares
The list of companies who delay paying dividends becomes longer and longer, including NHW, CTM, SD3, S64, ALV, HHL and most recently SIC and PHT. The common reason for their delay is “unability of balancing capital resources” or “financial difficulties”. Other reason includes difficulties in projects payback (for NSN), bank’s restriction in lending, or lack of financial resources to ensure the stable activities of production and businesses (for S74).
In particular, the Hoa Binh Automobile Mechanical Joint Stock Company (AHF) has not been paying dividends for six years. There are some enterprises, such as DXG justifies that it’s waiting for the guiding documents of authorities to exempt personal income tax from dividends. However, the shareholders suspect this excuse. They consider that there are many ways of solving this problem instead of forcing shareholders to wait nearly four months, most simply DXG can ordinarily pay dividend to investors with the deduction of personal income tax, after guiding document is published, DXG can return the deduction to their shareholders afterward.
As for the payment of dividends in shares, enterprises are late in paying dividends mainly because they have to carry out the administrative procedures related to capital raising and registering securities. Enterprises are eager to list their additional shares only when shares prices are up.
The investors suffer the loss
Many enterprises explained that they had to perform many administrative procedures related to capital raising and registering new shares, which caused such delays. However, according to Mr Pham Trung Minh, the deputy head of Securities Registration Division, Central Securities Depository (VSD) the real reason is that there are not penalties, as for companies delaying in paying dividends, the VSD can only remind and warn them by producing documents.
Many investors said the information of dividend postponement confused them because it seems to be a signal notifying the health of enterprises, and therefore, the delayed payment of dividends reported that many enterprises are misunderstood of being “in troubles”. Due to delayed payment of dividends, investors also put questionary to the capability of leadership or lack of corporate transparency.
Interest rates are so high that enterprises can not manage to gain the capital for business and production. Therefore, the delay paying dividends in many enterprises over time will “help” enterprises to reduce the concerns about capital. Many enterprises postponed the dividend payment term to months, half a year that caused its shareholders pressing: Are the funds appropriated?
Back to the issue of bonus shares, many enterprises have to issue more shares when eligible, a series of large and small joint stock companies did not hesitate to raise the capital, issuing shares as a fast, convenient channel which does not suffer from the interest rate. For large enterprises such as ACB, Sacombank, Eximbank, the securities companies SSI, SBS, KLS… then every time the issue of additional shares is not less than VND100 billion, means that 10 million shares will be put into circulation.
The issue of bonus shares or share dividends has long been concerned by the press, many economists say the nature of the dividends or issuance of additional shares to existing shareholders as to take the money from shareholders pocket and divided to shareholders. The “rolling pin” to get the right to receive the prize, the right to receive dividends, to buy more shares right along with investors being “trapped” in capital, usually it takes a few months to receive their shares. If shares market is unstable, shares prices are falling, investors will be unable to "cut losses" immediately, and then, their rate of loss will be proportional to the rate of share bonus, bonus shares become “penalty” shares.
Many investors ask for what enterprises continuously increase capital when the large amounts of additional shares will put pressure on the executive board in making a profit in the following years to compensate dilution. The Kim Long Securities (KLS) has recently increased double its capital, however, then there was time when KLS brought VND 1,644.75 billion put in banks’ deposit. If any enterprises act like KLS, shareholders could only cry when enterprises continuously think the new “way” to leverage new capital investment.
Huong Ly
Vietnamese
