Draft circular aimed to push transparency

Better corporate governance will give a strong boost to Vietnam’s fledgling stock markets

The drafting circular stated that auditing company representative would be invited to the listed firm’s annual general meeting (AGM) to give comments about the company’s audited financial reports.

Additionally, members of the management board, executives, supervisors and relative persons who have business contracts with the company must be decided by its AGM or other non-interest members.

“All the approvals of these business contracts by AGM resolutions will be made public within 24 hours,” said the draft circular.

An AGM’s quality will be enhanced as information about a company’s management board candidates must be announced 15 days prior to the AGM to allow shareholders to consider before voting, it said.

Previously, candidates for these management posts were also announced but just hours before AGM.

“Principally, all information, documents about an AGM have to be sent to shareholders in advance and the new circular is clearer about this,” said Huy Nam, an independent equity analyst. 

Shareholders also have new responsibilities to listed firms.  “If shareholders are invited to attend AGM but do not, the company’s management board has right to invite the Vietnam Securities Depository Centre representative instead,” the draft circular said, adding that numerous AGMs have failed because of shareholders’ poor rates of attendance.

“The new circular is expected to be issued before the next AGM season in 2011,” said a senior State Securities Commission official. Vietnam’s private sector has been growing strongly and hundreds of businesses have increased in size towards becoming regional and global players.

Similarly, Vietnam’s economy has also integrated comprehensively at an increasing depth into regional and international economies. 

“Therefore, improving corporate governance regulations and practices are clearly a priority now,” said Nguyen Dinh Cung, deputy head of the Ministry of Planning and Investment’s Central Institute for Economic Management.