Vinamilk AGM reject charter amendments

The first recommendation was that current members of Vinamilk’s board and the inspection committee to automatically lose their positions when they no longer represent an institutional shareholder.

Tran Thanh Tung, an independent lawyer at P&P legal consulting firm, questioned the word “automatic”. He argued that although it was understandable that a Vinamilk board member would lose his position upon ceasing/ending their affiliation with an institutional shareholder, this process should never be considered “automatic”.

Tung referred to the Enterprise Law 2014, which states that the board is elected during the annual shareholders’ meeting, thus a removal of its members must also be passed by another meeting. Any decisions made without consulting the shareholders’ meeting is strictly illegal.

An investor has also cited the example of Vinamilk’s chairwoman Mai Kieu Lien, who continued to hold her position at Northern Seeds Corporation even after cancelling her association with the State Capital Investment Company (SCIC). As a result, the first suggestion was rejected.

Another proposal concerned the head of the inspection committee position and suggested that a member should concurrently be an employee at Vinamilk, to follow Article 163 of the Enterprise Law 2014.

A foreign shareholder voiced his concern: “From my experience, in international firms the person holding this position is usually an independent member of the management board, not an officer within the firm. I doubt the legal status of this recommendation.”

In response, Pham Thanh Tung identified a conflict between the Enterprise Law and the Labour Law. If the head of the inspection committee is also an employee at the Vinamilk, the firm’s employee welfare programs will need to be revised accordingly and this may interfere with shareholders’ interests.

The majority of shareholders agreed that the current independent inspection committee of Vinamilk was operating well, thus it would be unnecessary to change the charter. The suggestion was ultimately rejected.

Lastly, the meeting also dismissed a proposal that Vinamilk should add another independent member, on the grounds that this suggestion was offered too late for consideration.

A Singaporean investor explained, “This sudden proposal was only announced on April 22, which is less than a week before the meeting. I believe it is too rushed and shareholders have not been given enough time to fully consider a new member.” (use ‘the’ only if there had been a proposal as to a specific person to this post)

All of the three suggestions were put forward by SCIC, a majority shareholder of Vinamilk with 45 per cent of the stakes. A representative from PXP Asset Management openly voiced her criticism that all of these recommendations were redundant for a company with such transparent corporate governance like Vinamilk.

For 2015, Vinamilk aims to achieve a consolidated revenue of VND39 trillion ($1.8 billion), equalling a 9.4 per cent increase compared to 2014. After-tax profit is expected to stand at VND6.8 trillion ($323.8 million), amounting to a 12.6 per cent rise from last year. Dividends in cash will account for 50 per cent of the after-tax profit.

To reach this target and cope with increased competition, Vinamilk will spend heavily on marketing and advertising this year. The company will also dedicate VND4 trillion ($190.4 million) to a new series of overseas mergers and acquisition deals, including taking over a French milk firm. According to the board, these M&As will boost Vinamilk’s export volume, expand worldwide market share and strengthen ingredient sources.

For the first quarter of 2015, Vinamilk has recorded an after-tax profit of VND 1.8 trillion ($85.7 million), a 10.3 per cent advance year-on-year.