Aug 27, 2019 / 18:02

New Corporate Governance Code brings best practices to Vietnamese firms

The Hanoitimes - This is the first corporate governance code developed and released specifically for the Vietnamese market, in compliance with current legislation.

Launched in mid-August 2019, the “Vietnam Corporate Governance Code of Best Practices” is expected to raise the quality of corporate governance in Vietnamese public and listed companies, according to PwC.
 
Illustrative photo.
Illustrative photo.
The “Vietnam Corporate Governance Code of Best Practices” was developed by the State Securities Commission of Vietnam with support from the International Finance Corporation (IFC), the World Bank and the Swiss State Secretariat for Economic Affairs (SECO). This is the first corporate governance code elaborated and released specifically for the Vietnamese market, in compliance with current legislation.

Essentially, the Corporate Governance Code is a collection of recommendations for Vietnamese public and listed companies, covering best corporate governance practices and standards that go beyond the minimum requirements in existing laws and regulations. This Code aims at raising the standards of corporate governance practices in Vietnam to a level similar to that of its top regional ASEAN counterparts, who already have similar codes in place.

Structure of the Corporate Governance Code

The Vietnam Corporate Governance Code draws upon the G20/OECD Principles of Corporate Governance, the 2017 ASEAN Corporate Governance Scorecard, as well as the most recent corporate governance codes of countries around the world. Efforts have been made to ensure there is no conflict between this Code and other existing laws and regulations. However, if a conflict should arise, then laws and regulations will prevail.

The Vietnam Corporate Governance Code is divided into 5 areas consisting of 10 principles and sub-principles. The arrangement of the principles takes into account the relevance and priority of the current issues in the corporate governance performance of Vietnamese companies.

The six principles on the responsibility of the Board are considered the most important ones in the Code. They allow stakeholders to understand the important roles and accountabilities of the Board and its members, the framework and mechanism for the Board members to undertake and perform their duties in a transparent and effective manner, as well as the best practices for a balanced and competent Board.

New heights for corporate governance

The launch of the Code is an important milestone in the country’s efforts to promote sound corporate governance practices, according to Hoang Hung, partner at PwC Vietnam and a member of the Vietnam Corporate Governance Initiative (VCGI) and Vietnam Institute of Directors (VIOD).

Hung said that good corporate governance helps ensure the long-term sustainability of a company in the best interest of its shareholder and stakeholders. It will help create market confidence and business integrity, contributing to the company’s competitiveness and reputation while facilitating access to capital markets.

“And a community of businesses with good corporate governance will make up the core of a robust financial market and strong economic growth,” Hung affirms.