Need to audit capital contributions within 5 years

This is the content of the draft law amending 7 laws, including the Securities Law, which was discussed in the National Assembly's plenary session on the morning of November 7th.

Public offering of securities: Capital contributions must be audited for the past 5 years.

This is the content of the draft law amending 7 laws, including the Securities Law, which was discussed in the National Assembly's plenary session on the morning of November 7th.

On the morning of November 7th, the National Assembly discussed in the plenary session the draft laws amending and supplementing several articles of the Law on Securities; the Law on Accounting; the Law on Independent Auditing; the Law on State Budget; the Law on Management and Use of Public Assets; the Law on Tax Management; and the Law on National Reserves.

Previously, during the group discussion, several opinions agreed on the need for independent auditing firms to conduct audits of capital contributions and capital increase processes of enterprises, due to the very high risk level of the stock market, while the level and ability of investors, especially individual investors, to analyze, assess, and manage risks in the market are still not high.

Regarding the timeframe, some opinions support the draft regulation of 10 years, while others agree with shortening the reporting period to 5 years to make it more convenient for businesses to submit reports.

In the report summarizing and explaining the opinions discussed in the working group regarding the deadline for capital audit reports, the Ministry of Finance plans to report to the Government and the Prime Minister for consideration and decision on shortening the reporting period from 10 years to 5 years.

According to the drafting agency, adding a regulation on the deadline for reporting audits of contributed charter capital in cases of initial public offerings or registration of public companies is necessary to improve the quality of securities on the stock market and prevent the introduction of fictitious or virtual capital into the stock market. This is also a point raised in the reports proposed by relevant inspection, supervision, and investigation agencies. Simultaneously, this contributes to the development of a safe, transparent, efficient, and sustainable capital market.

Regarding the proposal to shorten the reporting period to 5 years, the Ministry of Finance acknowledges and incorporates the feedback from many National Assembly deputies to finalize the draft. Specifically, the Ministry of Finance plans to revise the draft law as follows: The report on contributed charter capital within the 5 years prior to the initial public offering/registration of a public company must be audited by an independent auditing firm. For businesses established less than 5 years ago, the calculation will be from the date of establishment.

According to the initial draft, the public offering of securities would require an audited capital report with a validity period of up to 10 years. Many experts have questioned the feasibility of this regulation. The reason is that many businesses have undergone splits, mergers, changes from state-owned enterprises to joint-stock companies, or sold parts to foreign entities, making it difficult to collect documentation on capital over a 10-year period. Furthermore, independent valuation of contributed assets is necessary, especially if shareholders do not contribute capital in cash. Therefore, while requiring an audited capital report over a long period protects investors, it could also create difficulties for family businesses that previously had no intention of listing shares or had not prepared complete and clear records.

Source: https://baodautu.vn/chao-ban-chung-khoan-ra-cong-chung-can-kiem-toan-von-gop-trong-5-nam-d229425.html