Assignment about the comparison between g20 oecd principles of corporate governance and corporate law 2005

Name Hà Phương Linh Student code 11152431 Assignment about the comparison between G20/OECD Principles of corporate governance and corporate law (2005) Table of Contents I, Introduction 2 II, Content 3[.]

Name: Hà Phương Linh

Student code: 11152431

Assignment about the comparison between G20/OECD Principles of

corporate governance and corporate law (2005)

Table of Contents

I, Introduction 2

II, Content 3

Chapter I: Ensuring the basis for an effective corporate governance framework 3

Chapter II The Rights and equitable treatment of shareholders and key ownership functions .5 Chapter III : Institutional investors, stock markets and other intermediaries 17

Chapter IV The role of stakeholders in corporate governance 20

Chapter V Disclosure and transparency 23

Chapter VI The Responsibilities of the Board 27

III, Conclusion 31

The corporate governance framework in Vietnam is at an early stage of development, andrelevant laws and regulations are being developed The informal sector is still informal in that theinformal securities market is much larger than the formal one, and the state maintains asignificant shareholding equitized enterprises The capacity and resources of agencies andorganizations responsible for management, enforcement and market development are limited.

So, let’s take a quick look about corporate law in 2005 and have a comparison between OECDPrinciples of Corporate Governance and Corporate Law (2005) to find out some similarity anddifference, This report provides a basis for Vietnam to assess compliance with corporategovernance practices in relation to OECD corporate governance principles This report describescurrent practices and issues policy recommendations in six areas: (i) corporate governanceframework; (ii) rights of shareholders; (iii) equal treatment with shareholders; (iv) the role ofstakeholders in corporate governance; (v) disclosure and transparency; and (vi) theresponsibilities of the Board

The report shows that Vietnam has made significant progress in setting up a corporategovernance framework However, there are still some big challenges ahead These challengesinclude ensuring the implementation of new legal changes, strengthening the capacity of the

securities market regulator, enforcing compliance with the law developing the framework andstandards for the informal securities market, raising awareness and training board members oncorporate governance, and encouraging quality, timely and easy information to approach.

II, Content

This section assesses Vietnam's compliance with each of the OECD Corporate GovernancePrinciples, which is relied on the corporate law presented in 2005 Policy recommendations can

be made if a principle is not fully complied

The Principles provide guidance through recommendation across 6 chapters These aresupplemented by annotations that contain commentary on the Principles and are intended to helpreaders understand their rationale

Chapter I: Ensuring the basis for an effective corporate governance framework.

The corporate governance framework should promote transparent and fair market, and theefficient allocation of resources It should be consistent with the rule of law and support effectivesupervision and enforcement

A The corporate governance framework should be developed with a view to its impact onoverall economic performance, market integrity and the incentives it creates for marketparticipants and the promotion of transparent and well-functioning

B The legal and regulatory requirements that affect corporate governance practices in ajurisdiction should be consistent with the rule of law, transparent and enforceable

Listing regulations Decree No 144/2003 / ND-CP sets forth regulations on issuance ofsecurities to the public, continuous obligations of listed companies, regulations relating tosecurities transactions and the provision of securities and services related to the securitiesmarket in the territory of the Socialist Republic of Vietnam The issuance of government

bonds, local government bonds, securities of credit institutions, shares of equitized SOEs andconvertible bonds of foreign-invested enterprises The company is not regulated by Decree144/2003 / ND-CP.15

In this context, these companies are exempted from the obligation to report and discloseinformation enforced by the SSC On the unofficial market has not been managed, thebenefits of

Minority shareholders are not effectively protected to avoid being abused by issuers or majorshareholders

According to §30 of Decree 144/2003 / ND-CP, the regulations on listing include:

 A joint stock company with a minimum charter capital of VND 5 billion;

 Have a healthy financial situation, no overdue debt over one year;

 The result of business operation is profitable for at least the last two years, there is noaccumulated loss;

 The board of directors, board of directors and board of supervisors of the companyare committed to hold at least 50% of their shares in the company at least 3 yearsfrom the date of listing, regardless of the state capital they are in may be authorized

Listed in Vietnam are the SSC and the STC The SSC was established in 1996 as agovernment agency reporting directly to the Prime Minister In 2004, the agency wasreorganized and is now a unit under the Ministry of Finance The mandate of the SSC isset out in Decree 144/2003 / ND-CP SSC is responsible for organizing, managing,supervising and enforcing the entire operation of the securities market Under theSecurities Act 2006 (which will come into effect in 2007) STCs will become self-governing organizations.

D Stock market regulation should support effective corporate governance

Stock markets can play an important role in improving corporate governance byestablishing and enforcing requirements that promote effective corporate governance bytheir listed issuers Some state agencies such as the State Securities Commission (SSC),the Steering Committee State Treasury (NSCERD), MOF, SBV, Academy of Finance(AOF) and CIEM Promote good corporate governance In 2002, there were threedifferent sample formats, including corporate governance provisions that were introducedfor listed companies, joint stock banks and equitized SOEs

E Supervisory, regulatory and enforcement authorities should have the authority, integrityand resources to fulfill their duties in a professional and objective manner Moreover,their rulings should be timely, transparent and fully explained

F Cross-border co-operation should be enhanced, including through bilateral andmultilateral arrangements for exchange of information

Chapter II The Rights and equitable treatment of shareholders and key ownership functions

The corporate governance framework should protect and facilitate the exercise of shareholders’rights

Basic shareholder rights should include the right to: 1) secure methods of ownership registration;2) convey or transfer shares; 3) obtain relevant and material information on the corporation on a

timely and regular basis; 4) participate and vote in general shareholder meetings; 5) elect andremove members of the board; and 6) share in the profits of the corporation

1 Basic shareholders’ rights

Secure methods of ownership

registration

Convey or transfer shares

Obtain relevant and material

information on the corporation on a

timely and regular basis

Participate and vote in general

shareholder meetings

Elect and remove members of the

board

Share in the profits of the corporation

Secure methods of ownership registration allshareholders (Article 86)

(Clause 3, Article 86)

3 The register of shareholders shall be kept at the headoffice of the company or the center for securitiesregistration, depository, clearing and settlement.Shareholders have the right to check, look up or extractand copy the contents of the register of shareholdersduring working hours of the company or the center forregistration, depository, clearing and settlement ofsecurities

Convey or transfer shares

all shareholder except preference shareholders (Article87)

For common shareholders:

(Clause 1 Article 79)

d / To freely transfer their shares to other shareholdersand non-shareholders other than those prescribed inClause 5, Article 84 of this Law;

Except:

(Clause 3, Article 81)

3 A shareholder owning a voting preference share is notallowed to transfer the shares to another person

(Clause 5, Article 84)

5 Within three years from the date the company isgranted a business registration certificate, foundingshareholders have the right to freely transfer theirordinary shares to other founding shareholders, but onlytransfer ordinary shares to non-founding shareholders ifapproved by the General Meeting of Shareholders In thiscase, the shareholder intending to transfer the shares doesnot have the right to vote on the transfer of such sharesand the transferee automatically becomes the foundingshareholder of the company

After three years from the date the company is granted abusiness registration certificate, the restrictions onordinary shares of founding shareholders will beabolished

Obtain relevant and material information on thecorporation on a timely and regular basis

For common shareholders:

(Clause 1 Article 79)

e) To consider, look up and extract information on thelist of shareholders with voting rights and request thecorrection of inaccurate information;

e) Reviewing, searching, extracting or copying thecompany's Charter, book of minutes of the GeneralAssembly of Shareholders and resolutions of the GeneralAssembly of Shareholders;

For shareholders in Clause 2 Article 79:

b) Reviewing and extracting minutes and resolutions ofthe Board of Directors, mid-year and annual financialstatements according to the form of the Vietnameseaccounting system and reports of the Board ofSupervisors; Participate and vote in general shareholdermeetings all shareholders except dividend shareholdersand redeemable shareholders

For common shareholders:

(Clause 1 Article 79)

1 Common shareholders have the following rights:

a / To attend and speak at the shareholders' congressesand exercise their right to vote directly or through theirauthorized representatives; Each ordinary share has onevote;

For preference shareholders:

(Clauses 1 and 2 Article 81)

1 Voting preference shares are shares with a highernumber of votes than ordinary shares The number ofvotes of a voting preference share shall be stipulated inthe charter of the company

2 Shareholders owning voting preference shares shallhave the following rights:

a) To vote on matters falling under the competence of theGeneral Meeting of Shareholders with the number ofvotes as stipulated in Clause 1 of this Article;

b) Other rights as ordinary shareholders, except asprovided for in paragraph 3 of this Article

Except:

2 Shareholders owning dividend preference shares donot have the right to vote, attend the General Meeting ofShareholders, nominate persons to the Board of Directorsand the Control Board (Article 82)

(Article 83)

3 The redeeming preference shareholders do not havethe right to vote, attend the General Meeting ofShareholders, nominating candidates to the Board ofDirectors and the Board of Supervisors

Elect and remove members of the board onlyshareholders in Clause 2 Article 79

2 A shareholder or a group of shareholders owning morethan 10% of the total number of ordinary shares for atleast six consecutive months or a smaller percentage asstipulated in the charter shall have the following rights:

a / To nominate persons to the Managing Board and theControl Board (if any);

Share in the profits of the corporationall shareholders (Article 93)

2 Shareholders should have the

opportunity to participate effectively

and vote in general shareholder

meetings and should be informed of

the rules, including voting

procedures, that govern general

to the opening of the meeting if the charter of thecompany does not specify a time limit Notice is sent bythe method of guarantee to the permanent address ofshareholders

The meeting invitation must include the name, address ofthe head office, the number and date of issuance of thebusiness registration certificate of the company; thename and permanent address of the shareholder or theauthorized representative of the shareholder; time andplace of meeting The procedures and procedures forshareholder meetings should allow equitable treatment ofall shareholders

(Article 103)

5 The General Meeting of Shareholders shall discussand vote on each issue in the program content Voting iscarried out by collecting the voting card approving theresolution, then collecting the voting card withoutendorsement, finally counting the vote counting vote ofapproval, disapproval, no opinion The results of the

counting shall be announced by the chairperson justbefore the closing of the meeting;

6 Shareholders or delegates who arrive after the opening

of the meeting are registered and have the right toparticipate in voting right after registration Thechairperson shall not stop the meeting for lateregistration; In this case, the validity of the votes castshall not be affected;

Shareholders should have the opportunity to askquestions to the board, to place items on the agenda ofgeneral meetings, and to propose all shareholders

2 According to Article 99, Shareholders or groups ofshareholders stipulated in clause 2 of Article 79 of thisLaw shall have the right to recommend matters to beincluded in the agenda of the General Meeting ofShareholders The proposal must be in writing and sent

to the company no later than three working days beforethe opening date, unless otherwise stipulated in thecharter of the company The petition must clearly statethe name of the shareholder, the number of each kind ofshare held by the shareholder, the number and date ofshareholder registration at the company, the proposedissue to be included in the agenda

3 The convener of the General Meeting of Shareholdersshall have the right to refuse a petition referred to inclause 2 of this article in any of the following cases:

a / The petition is sent not within the prescribed timelimit or inadequate or inappropriate;

b) The petition does not fall under the decision-makingauthority of the General Assembly of Shareholders;

c) Other cases as stipulated in the charter of thecompany

4 The convener of a meeting of the General Meeting ofShareholders must accept and make recommendations asprescribed in clause 2 of this Article in the proposedagenda and content of the meeting, except for the casesstipulated in clause 3 of this Article; The proposal is

officially added to the agenda and content of the meeting

if approved by the General Assembly of Shareholders.Effective shareholder participation in key corporategovernance decisions, such as the nomination andelection of board members, should be facilitated.Shareholders should be able to make their views known,including through votes at shareholder meetings, on theremuneration of board members and/or key executives,

as applicable

All shareholders except dividend shareholders andredeemable shareholders (that shall not have the right tovote) Nomination and election of board members:(Article 79)

4 Unless otherwise stipulated in the charter of thecompany, the nomination of persons to the Board ofManagement and the Control Board as stipulated inclause 2 (a) of this article shall be implemented asfollows:

a) General shareholders voluntarily grouped into groupsthat meet the prescribed conditions to nominatecandidates for the Board of Directors and the Board ofSupervisors must notify the meeting to the shareholdersattending the meeting at the latest at the opening of theGeneral Assembly of Shareholders;

b) Based on the number of members of the ManagingBoard and the Control Board, shareholders or groups ofshareholders defined in Clause 2 of this Article, they maynominate one or several persons under the decisions ofthe shareholders' general meeting Members of the Board

of Directors and the Control Board Where the number ofcandidates nominated by a shareholder or group ofshareholders is lower than the number of candidates theyare entitled to nominate in accordance with the decision

of the General Assembly of Shareholders, the remainingnumber of candidates shall be decided by the Board ofDirectors control and other shareholders nominated

Remuneration: (Article 117)

2 Unless otherwise stipulated in the charter of thecompany, remuneration, salary and other benefits of

members of the board of management, director orgeneral director shall be paid in accordance with thefollowing provisions:

a) Members of the Managing Board are entitled toremuneration and bonuses Remuneration is calculatedaccording to the number of working days required tocomplete the duties of the members of the Board ofDirectors and the daily remuneration The Board ofDirectors shall estimate the remuneration of eachmember on the principle of consensus The totalremuneration of the Board of Directors is decided by theGeneral Meeting of Shareholders at the annual meeting;

b) The members of the Board of Directors are entitled tothe payment of expenses for meals, accommodation,travel and other reasonable expenses paid by them in theperformance of their assigned tasks;

c) The director or general director shall be paid salariesand bonuses The salary of the director or generaldirector shall be decided by the Managing Board

3 The remuneration of members of the Board ofDirectors and the salary of the director or generaldirector and other managers shall be included in thebusiness expenses of the company in accordance with theprovisions of the law on enterprise income tax and must

It is required to report to the General Assembly ofShareholders at the annual meeting

Shareholders should be able to vote in person or inabsentia, and equal effect should be given to voteswhether cast in person or in absentia

3 All shareholders of the same series

of a class should be treated equally

Capital structures and arrangements

that enable certain shareholders to

obtain a degree of influence or

control disproportionate to their

equity ownership should be disclosed

All shareholders of the same series of a class are treatedequally same as OECD

Preferred shares include the following types:

a) Voting preference shares;

b) Dividend preference shares;

c) Redeemable preference shares;

d) Other preference shares stipulated in the charter of thecompany

5 Each share of the same type gives the person whoowns the same rights, obligations and benefits

Capital structures and arrangements are disclosed same

as OECD (Article 86)

3 The register of shareholders shall be kept at the headoffice of the company or the center for securitiesregistration, depository, clearing and settlement.Shareholders have the right to check, look up or extractand copy the contents of the register of shareholdersduring working hours of the company or the center forregistration, depository, clearing and settlement ofsecurities

1.According to article 118, Members of the Board ofDirectors, members of the Control Board, the director orgeneral director and other managers of the company mustdeclare their related interests to the company, including:(a) Name, address of the head office, branch of business,number and date of issuance of the business registration

certificate of the enterprise in which he holds the capitalshare or shareholding; the rate and time of ownership ofsuch capital contribution or share;

(b) Name, address of the head office, business line,number and date of the business registration certificate ofthe business where the persons concerned own or ownOnly share or capital contribution is over 35% of chartercapital

2 The declaration prescribed in Clause 1 of this Articlemust be effected within seven working days after thearising of relevant interests; Any amendment orsupplement must be reported to the company withinseven working days from the date of amendment andsupplement

3 The declaration prescribed in Clauses 1 and 2 of thisArticle must be notified to the General Assembly ofShareholders at its annual meeting and posted up andkept at the head office of the enterprise Shareholders,authorized representatives of shareholders, members ofthe board of management, controllers, directors orgeneral directors are entitled to consider the declaration

at any time if deemed necessary

Chapter III : Institutional investors, stock markets and other intermediaries.

The corporate governance framework should ensure equal treatment for all shareholdersincluding minority shareholders and foreign shareholders Every shareholder should have theopportunity to make an effective complaint when their rights are violated

A All shareholders of the same series of a class should be treated equally

1 Within any series of a class, all shares should carry the same rights All investors should beable to obtain information about the rights attached to all series and classes of shares before theypurchase Any changes in voting rights should be subject to approval by those classes of shareswhich are negatively affected