On the morning of November 7, the National Assembly discussed in the hall the draft Law amending and supplementing a number of articles of the Securities Law, the Accounting Law, the Independent Audit Law, the State Budget Law, the Law on Management and Use of Public Assets, the Tax Administration Law and the Law on National Reserves.

Inject money to increase charter capital

Regarding the Securities Law, delegate Nguyen Huu Toan (Lai Chau delegation) said that the revised draft Law states that the dossier for public offering of shares must include a report on contributed charter capital within 10 years from the time of the initial public offering, audited by an independent auditing company.

Mr. Toan said that auditing to determine the initial charter capital is a very important content to determine the actual contributed charter capital and total capital, total number of shares issued to the public and the number of shares that will continue to circulate in the secondary market.

"If the charter capital is not determined accurately, it is a fraud for all investors from the first purchase to the next purchases," said Mr. Toan.

The National Assembly delegate gave the example of FLC's Faros company, which had an initial charter capital of 1.5 billion VND, and after 5 times of charter capital increase in 3 years (2014 - 2016), its capital increased to 4,300 billion VND. This caused huge consequences for the whole market.

Recently, in the Saigon Dai Ninh case, Mr. Nguyen Cao Tri used similar magic many times to increase the capital to 2,000 billion VND.

"Their magic method is to pump a certain amount of money into the accounts, then withdraw and pump it in until the total sales equal the total charter capital," Mr. Toan pointed out.

Therefore, the delegate affirmed that auditing is very necessary to ensure a transparent and clean stock market. If the regulation included auditing charter capital, the above cases would not have happened.

Regarding the time limit for auditing charter capital contributions proposed by the Government, which is 10 years, delegate Nguyen Huu Toan suggested shortening it to maybe 5 years to ensure cost savings, but the ultimate goal is to develop a fair, transparent, and effective stock market.

Increase penalties for audit violations

Delegate Thai Thi An Chung (Nghe An delegation) agreed with the proposals to increase the subjects that need to be audited by adding Clause 5 and Clause 6 to Article 37 of the Law on Independent Auditing, which is "large-scale enterprises and other organizations must audit and report their finances according to Government regulations, and other enterprises and organizations according to relevant laws".

According to Ms. Chung, the current law does not stipulate this, leading to a number of large-scale enterprises, organizations or real estate companies that are not listed, not public, and do not need to be audited, causing serious impacts on society in recent times.

The female delegate pointed out that recently, through investigation and handling of a number of major cases occurring at SCB, Van Thinh Phat, and FLC, it showed the responsibility of a number of agencies and units, including auditing organizations and auditors, for dishonest audit reports.

"I agree that it is necessary to increase the level of penalties and the statute of limitations for serious violations of auditing standards, professional ethics standards, accounting and auditing to ensure deterrence for auditing firms and auditors who violate. However, the increase must be considered to ensure it is appropriate to the nature, level, consequences of the violation, the subject of the violation and to ensure general correlation with other fields," Ms. Chung suggested.

Delegate Thai Thi An Chung said that the Vietnamese independent auditing industry needs 3-4 times more personnel than the market size. Therefore, the delegate suggested that the maximum fine should only be increased by 2 times compared to the current level and the statute of limitations for fines should be 2 years.