Government and bank officials consider capital requirements and fiscal histories of companies seeking to operate exchange
TWO hundred attendees from government bodies, development partners and private companies took part on Thursday in a consultation in Phnom Penh that discussed the two draft edicts that will regulate aspects of Cambodia's nascent stock exchange.
Aun Porn Moniroth, a secretary of state at the Ministry of Economy and Finance, said the consultation marks the beginning of the process towards finalising the regulations.
"These two drafts are part of a series of 30 edicts we have prepared to run the upcoming stock exchange," he said.
The two edicts, or prakas, discussed Thursday were drafted by the Securities and Exchange Commission of Cambodia (SECC) and cover the granting of licences to firms wanting to deal in the market, and those that want to run it.
The prakas on the running of the market will grant an eight-year licence to each of the various operators of the stock exchange. Some of its provisions outline the capital requirements for firms wanting to run the market's functions.
A company looking to operate the stock market would need capital of US$9.52 million. The firm wanting to operate the clearance and settlement facility would need half that amount, $4.76 million.
The third company, which would operate the securities depository, would also need $4.76 million of capital.
A company wanting to act in all three capacities would need $19 million minimum capital.
The prakas states that the eight-year initial operating licence can be renewed prior to expiry for a further eight years, or indefinitely.
Participants at the conference suggested lower minimum capital requirements and raised the question of dealing with an article in the prakas that excludes any operator whose directors, senior staff or substantial shareholders have been declared bankrupt by a court here or abroad in the five years prior to the firm's lodging its application.
Nhean Vannak, a governance official at the Supreme National Economic Council (SNEC), said it was unfair to punish a person declared bankrupt in any business sector.
"An individual who has been declared bankrupt within five years but whose business was not involved in the financial or securities sector should not be refused the right to operate the securities market," he suggested.
However Chan Narith, director of the SECC's securities market-supervision department, rejected that argument in the interests of market confidence.
"The SECC will not allow that person [to operate] because there will be suspicions about the applicant's financial soundness," he said. Chan Narith was supported by Tal Nay Im, director general of the National Bank of Cambodia (NBC).
"Even though that person was bankrupt in another sector, they would still have a bankruptcy record," she said.
Tal Nay Im said the SECC should thoroughly consider the qualities of any firm looking to act as the operator of the securities depository.
"That must be done by a well-known, well-off and well-qualified firm," she said.