Businesses worry about "revealing secrets" if reducing the proportion of shares with the right to access information

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One percent of enterprise’s sharesare very big, no one is willing to risk their interest to make it difficult for businesses. Photo: Internet

Competitors cause difficulties

The Draft Law amending and supplementing a number of articles of the Law on Investment and the Law on Enterprises proposing amending Clause 2, Article 114 of the Law on Enterprises in the direction of reducing the percentage of owning shareholding by shareholders or groups of shareholders from 1% of the total number of common shares or a smaller percentage as stipulated in the company's charter has rights such as: requesting to review and extract the minutes book and resolutions of the Board of Directors, report semi-annual and annual financial statements according to the Vietnamese accounting system and reports of the Supervisory Board; requesting to convene an extraordinary General Meeting of Shareholders; requesting the Supervisory Board to examine each specific issue related to the management and administration of the company's operations ifnecessary.At the same time, the Draft Law also abolishes the condition of share ownership in the continuousperiod for at least 6 months.

According to Mr. Phan Le Hoang, Deputy General Director of the Pacific corporation, it is appropriate to remove the condition of owning shares for a continuous period of at least six months, because if they are a shareholder of the company, of course shareholders must immediately exercise their rights, regardless of if they are old or new shareholders.

However, he said that regulations on reducing the shareholding ratioof shareholders or groups of shareholders from 10% to 1% are not appropriate and does not guarantee a competitive environment for businesses.

According to Mr. Hoang, it is appropriate to protect the interests of small shareholders, but to stabilize the company, it needs to own a certain percentage to vote by the majority, ensuring the rights as well as the majorshareholders’ responsibilities.

Therefore, the representative of Pacific Corporation proposed to maintain the ownership rate of at least 10% of the total number of common shares of a shareholder or group of shareholders as prescribed in Clause 2, Article 114 of the current Enterprise Law.

Sharing the same view, Mr. Nguyen Thanh Viet, General Director of Intracom expressed his concern about the protection of business’s secrets.

“In corporate governance, professional management and protection of a business’ secrets are very important. If you do not think carefully, competitors will buy one percentand make difficult for businesses,”Mr. Viet said.

No one gets risks toharass businesses

According to Mr. Phan Duc Hieu, Deputy Director of the Central Institute for Economic Management (CIEM), corporate governance is one of the issues that needs special attention in the revision of this law. In particular, shareholder protection is the most important part of the corporate governance framework. Good shareholder protection regulations will make an important contribution to makebusinesses a safe business tool and thereby promoting and mobilizing investment capital.

Therefore, Mr. Hieu said that the above-mentioned amendment will help expand the rights of shareholders to access information about the operation of the company, creating more favorable conditions for shareholders to exercise their rights.

“In Japan, only one share is required to provide enterprise information. In Korea, the rate of 3% is applied. Therefore, we think the 1% is reasonable. We conducted a survey ofmore than three hundred companies on HoSE, and concluded that one percent of an enterprise’s shares isvery high, so no one will risk their rights related to one percent of shares to harass enterprises," Mr. Hieu stated.

In agreement, Mr. Dau Anh Tuan, Head of the Legal Department of the Chamber of Commerce and Industry (VCCI), said that the corporate governance in other countries pay shareholder rightsattention.The tendency of countries is to make people invest less capital but guarantee their benefits. However, according to Mr. Tuan, the reduction of the percentage of shareholding is still subject to scrutiny but the 1% ratio is reasonable, since 1% is not small for an investor, so they have to act based on that 1% interest.