SSC issues first-ever corporate governance code

10:28 | 23/09/2019 Economy

(VEN) - The first ever corporate governance code of best practices - a set of recommended practices for public Vietnamese companies has been issued by the State Securities Commission of Vietnam (SSC), aiming to promote investors’ confidence and develop the Vietnamese capital market.

ssc issues first ever corporate governance code
Effective corporate governance helps improve the quality of public and listed companies

SSC Chairman Tran Van Dung said the code lays out a series of recommendations on best corporate governance practices, primarily for Vietnamese public companies. It includes standards that go beyond the minimum legal and regulatory requirements, encouraging companies to move towards international best practices. This will also help Vietnam align with its ASEAN nations, which have long instituted similar codes.

The code consists of ten principles with detailed recommendations for best practices, focusing on addressing priority issues in corporate governance performance. Six of them focus on how boards of directors should operate - an area where Vietnamese companies need to improve. The remaining four principles cover topics such as control environment, transparency and disclosure, shareholder rights, and stakeholder relations.

The code also includes responsible business practices, such as promoting gender diversity and focusing on environmental and social issues.

Philippe Le Houerou, chief executive officer of the International Finance Corporation (IFC), said effective corporate governance yields many benefits, including promoting performance and enhancing the efficiency of trade and production activities, encouraging investment and strengthening access to the capital market, reducing capital raising costs, improving competitiveness, reducing the risk of corruption, and protecting shareholder equity.

Despite its many benefits, the code is not an easy process to implement. Nguyen Quang Trung, deputy general director of the Deloitte Vietnam, said many businesses have suffered the consequences of weak corporate governance.

Given Vietnam’s ambitions of international economic integration, corporate governance of public companies must focus on the responsibilities and duties of board members, the structures of boards of directors, the roles of board committees, and remuneration packages.

Implementation of the code must be a joint effort by all sides to assist public and listed companies in applying international corporate governance standards, with the aim of improving their quality. It also aims to promote investors’ confidence and develop the Vietnamese capital market, contributing to the nation’s sustainable economic development.

Ngoc Thao