AGMs likely to address market boost

Companies are set to release their annual performance figures, photo Le Toan

The content of the draft amendment to Decree No.155/2020/ND-CP guiding the Law on Securities 2019 expected to be announced in March to seek opinions from market members. Spurred by this recent development and considering Vietnam’s goal of market upgrading by 2025, the State Securities Commissions (SSC) is urging businesses to prioritise enhancements in corporate governance and transparency in information disclosure.

According to SSC chairwoman Vu Thi Chan Phuong, in addition to technical issues such as pre-funding requirements and foreign investor ownership limits, improving the overall quality of corporate governance and the quality of information disclosure for listed companies is also imperative to achieve the market upgrade goal.

“Companies in the stock market need to commit to and implement action plans to enhance corporate governance practices in line with international norms and regional trends, as well as transparent, quality information disclosure, including English-language reporting,” she said. “The Ministry of Finance also plans to amend legislation detailing the implementation of certain provisions of the Law on Securities and related circulars.”

She emphasised that as each enterprise enhances its corporate governance capacity and clarifies its environmental, social, and governance (ESG) strategy, it increases investor confidence and contributes to the consistent upgrading of the market from a frontier to an emerging market. This also contributes to improving Vietnam’s scores and rankings on the ASEAN Corporate Governance Scorecard (ACGS).

At a seminar on innovative and effective shareholder meetings held simultaneously at the Ho Chi Minh Stock Exchange and Hanoi Stock Exchange on March 1, Phan Le Thanh Long, CEO of the Vietnam Institute of Directors, stressed the need for board of directors (BODs) to go beyond mere compliance and shift from a quantitative to a qualitative approach in their upcoming AGMs.

Citing results from ACGS 2023, Long highlighted four areas for corporate governance improvement in the next season: ensuring BOD responsibility, protecting shareholder rights, enhancing transparency, and integrating sustainable development.

“In terms of compliance, in the most recent shareholder meetings, 71 per cent of AGMs occur within four months after the fiscal year ends, and 87 per cent of companies maintain websites that publish all AGM documents. However, only 15 per cent of these documents offer comprehensive details about new BOD and supervisory board candidates (if any) at least 10 days prior to the meeting,” he said.

In addition, in terms of good practice - a level above compliance - 56 per cent documented that shareholders could ask questions, with the Q&A content recorded. However, only 12 per cent allowed shareholder comments outside AGMs, and merely 16 per cent had an investor relations department.

According to Dominic Scriven, chairman of Dragon Capital, corporate governance is a crucial aspect in the process of evaluating businesses and upgrading the stock market, even more than financial factors, business models, or growth rates.

“In fact, improving corporate governance is an ongoing journey with no end point because we will always have to learn new things and change every day,” he emphasised.

Pham Hong Son, deputy chairman of the SSC, noted that besides administrative procedure reforms, the key for state management agencies is to improve the quality of enterprises in various factors, such as financial reporting, business activities, legal compliance, and corporate governance linked to ESG.

“Within the Southeast Asian region, the assessment of Vietnam’s corporate governance is still relatively modest, so we still need to learn more from neighbouring countries such as Thailand or Singapore,” he said.

“Previously, we only recommended BOD members to attend additional training courses, but in the near future, we will amend some regulations to make certain hours of training mandatory each year. This helps managers in companies recognise the importance of updating knowledge related to management.”

Son disclosed the SSC’s plan to establish a corporate management team within itself, and encouraged the stock exchanges to also adopt this practice.

“If governance practices are strong, operational risks can be minimised. I strongly advocate for every publicly traded company to devise tailored programmes aimed at fostering continuous improvement within their operations. By enhancing business practices, companies can play a pivotal role in facilitating a seamless and successful upgrade of the stock market,” he advised.

VIOD holds corporate governance and market upgrade event amid new AGM season With support from the State Securities Commission (SSC) and in collaboration with the Ho Chi Minh City Stock Exchange (HSX) and Hanoi Stock Exchange (HNX), the Vietnam Institute of Directors (VIOD) on March 1st organised a seminar titled "Towards a Season of Innovative and Effective Shareholder Meetings".