Companies in Cambodia hoping to list on the planned stock exchange have, in some cases, a long way to go before they comply with the government’s regulations on transparency and accountability, officials and businesses said yesterday.
“The Cambodian people who aren’t ready may need some time,” said Ming Bankosal, director-general of the Securities and Exchange Commission of Cambodia, speaking on the sidelines of a public consultation where officials informed the business community of the information they must disclose before being allowed to issue securities on the stock market.
According to a draft document released yesterday in Phnom Penh, listed companies must disclose information on everything from profits and cash flow to risk and total assets before they can legally make a public offering to the market.
The document also requires companies to disclose the identities of any person holding more than five percent of the company’s shares, as well as levels of indebtedness and historical financial information.
The document is part of a long process currently being implemented by the government to regulate the bourse and shelter it from companies looking to operate in murkier areas of the economy.
“We have to be careful. Trust and confidence is very important,” Mr Bankosal said. “To build we have to have sound conditions. It’s very important for us to develop in a sustainable manner.”
However, he added that some of the better established Cambodian companies – he did not give any names – were already on their way to reaching the necessary standards.
“I think there are some Cambodian companies that have already applied the accounting standards and who are audited. If they’re audited…that means some levels of transparency and accountability,” he said.
Still, private sector companies have yet to come forward and express interest in listing on the new bourse, preferring instead to observe how things progress.
The government has so far ordered three state-owned enterprises – Telecom Cambodia, Phnom Penh Water Supply Authority and Sihanoukville Autonomous Port – to prepare themselves to list.
“Originally Telecom Cambodia did not want to do this thing,” said one senior official at Telecom Cambodia, who spoke on condition on anonymity as he was not authorized to speak publicly. “But the government asks and says we are supposed to be listing.”
Asked why Telecom Cambodia had not initially been interested in the prospect of listing, he said, “It’s related to our knowledge. We never do this job, right?”
Gathering the required information “is very difficult, especially related to the financial report,” he added.
Chea Phakdei, an auditor at the chartered accountancy firm Horwath, said that while larger firms in Cambodia tend to follow internationally recognized accounting and auditing standards, many do not.
“Practically not every company will follow the standards. That is why most companies need to be audited,” he said. “It seems like most companies know about accountancy standards but they do not apply them.”
Scott Lewis, a senior partner at the private equity firm Leopard Capital, said that companies looking to list in order to generate more capital for their business would simply have to do the extra work needed to improve standards in corporate governance and accountancy.
“I think it’s going to take a while. But I think that people are interested in doing business on the stock exchange so they will have to conform to the rules,” he said.
“If they can’t do it themselves they’ll have to get help from the outside to the clean the house up,” he said. “For accountancy firms it will be a wonderful time for them.”
Mr Lewis said that there are a handful of Cambodian firms – namely The Royal Group and Sokimex – who already adhere to the necessary standards.
The banking sector is also considered to have the necessary standards to enable them to list.
The government in July said that the new bourse would launch in July 2011 after having missed a string of former deadlines, which date back to 2005.