Regulations on company secretary in singapore and possibility to apply in vietnam

30 CHAPTER 3: APPLYING COMPANY SECRETARY AS A MEASURE TO IMPROVE CORPORATE GOVERNANCE IN VIETNAM ..... The thesis, finally seeking possibilities on applying such role of company secreta

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS OF HO CHI MINH CITY

NGUYEN HONG KHAI

REGULATIONS ON COMPANY SECRETARY OF SINGAPORE AND POSSIBILITY TO APPLY IN

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS OF HO CHI MINH CITY

NGUYEN HONG KHAI

REGULATIONS ON COMPANY SECRETARY OF SINGAPORE AND POSSIBILITY TO APPLY IN

VIETNAM

Major: Law of Economics

Code: 60380107

MASTER THESIS - LLM

Thesis Advisor: Dr HOANG THI THANH THUY

HO CHI MINH CITY - 2017

UNDERTAKINGS

 o 

I, the undersigned, with full name NGUYEN HONG KHAI – Code: 7701250592A,

be attending Master Class with major in Laws of Economics, Faculty of Law, University of Economics Ho Chi Minh City, being the writer of the Master Thesis “REGULATIONS OF COMPANY SECRETARY OF SINGAPORE AND POSSIBILITIES TO APPLY IN VIETNAM” (hereinafter referred to as “Thesis”)

Hereby undertake that all content presented in the Thesis is result from my independent research with instructions of my advisor Dr Do Hoang Thanh Thuy The Thesis has employed and extracted a number of comments, scientific opinions of other scholars and writers All information are properly sourced with sufficient and accurate evidence Figures and data therein are used with objectiveness and honesty

By NGUYEN HONG KHAI

CONTENT

 o 

UNDERTAKINGS i

ACRONYMS 1

ABSTRACT 1

INTRODUCTION 3

1 Reasons for adopting this topic 3

2 Research questions 4

3 Legal circumtances for adopting research questions 4

4 Purpose, objects and scope of research 6

5 Methodology and theory framework 6

6 Scientific meanings and value of the topic 7

CHAPTER 1: WHAT IS COMPANY SECRETARY? THE ROLE OF COMPANY SECRETARY AND ITS BENEFIT WITH CORPORATE GOVERNANCE IN SINGAPORE 1

1.1 Overview on company secretary from international-principles perpestives 1

1.2 Brief of legal basis of company secretary under Singaporean laws 5

1.3 Analysis on cohesion between company secretary and good corporate governance in Singapore 11

1.4 Key notes 15

CHAPTER 2: CURRENT REGULATIONS OF VIETNAM IN CORPORATE GOVERNANCE 17

2.1 Brief of legal framework on corporate governance in Vietnam 18

2.2 Limitations in corporate governance in Vietnam – analysis on a number of practical cases 23

2.2.1 Limitations in corporate governance in Vietnam 23

2.2.2 Analysis on a number of practical cases 27

2.3 Key notes 30

CHAPTER 3: APPLYING COMPANY SECRETARY AS A MEASURE TO IMPROVE CORPORATE GOVERNANCE IN VIETNAM 32

3.1 How the role of company secretary deal with current issues of corporate governance of Vietnam 32

3.1.1 How can company secretary deal with the current issues in corporate governance

of Vietnam? 32

3.1.2 How can company secretary deal with practical cases as described in Chapter 02?

33

3.2 Step-by-step measures in applying company secretary in Vietnam 34

3.2.1 Regularising role of company secretary into regulations of corporate governance

3.2.4 Carrying out propaganda activities for promoting the role of company secretary38

3.2.5 Buiding up and training professional company secretary force 38

3.3 Conclusions 40

APPENDIX 1

BIBLIOGRAPHY

ACRONYMS

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ACRA Accounting and Corporate Regulatory Authority AGM Annual General Meeting

ASEAN Association of South East Asian Nations

BOD Board Of Directors

DPI Department Of Planning and Investment

EB Executive Board

EGM Extraordinary General Meeting

FIEs Foreign Invested Enterprises

GCGF Global Corporate Governance Forum

GDP Gross Domestic Products

GTD General Tax Department

IFC International Finance Corporation

IPO Initial Public Offerings

JSC Joint Stock Company

LLC Limited Liability Company

LOE Law On Enterprise

LOI Law On Investment

LR Legal Representative

MAS Monetary Authorities of Singapore

MOF Ministry Of Finance

MPI Ministry of Planning and Investment

OTC Over-the-counter Martket

SBV State Bank of Vietnam

SSC State Securities Commisions of Vietnam

TPP Trans Pacific Partnership

UPCOM Unlisted Public Company Market

VACPA Vietnam Association of Certifted Public

Accountants VAFI Vietnam Association of Financial Investors VSD Vietnam Securities Depository

WTO World Trade Organisation

ABSTRACT

Vietnam has been a country actively joining in globalization progress by accessing

numerous international treaties e.g with the most significant one i.e WTO (since 2007),

TPP (which was passed by national assembly in 2016) so far Over time, it has been

witnessed that a lot of foreign investors with wide range of nationalities have set up their

commercial presence in Vietnam and remarkably contributed to the growth of national GDP

To maintain such investment flow-in, one of the contemporary concerns that Vietnamese

Government needs to pay effort is how to ensure that the legal framework provide sufficient

stipulations and enforcement so that the overall economy and all the parts therein can adapt

and develop healthily and efficiently In addition to promulgations of more favorable and

attractive investment policies, creation of compliant and reliable atmosphere in field of

corporate governance shall be one of the most priorities which Vietnam should have due

attention to and taking actions on soonest

The thesis firstly provides overview on how corporate governance function in

Vietnam is performing in light of current regulations A number of its downsides shall be

described purposely to raise needs in locating methods for remedial measures The thesis,

after that, will glance at how regulations of Singapore – a high-level developed economy –

adopts, defines, stipulates and assure the role of company secretary in corporate governance

in Singapore The thesis, finally seeking possibilities on applying such role of company

secretary with wishes of improving corporate governance for companies in Vietnam

In addition, during the career as a buinsess consultant and basing on the requests

from foreign investors, the writer find a necessity to study on the role of the company

secretary and how it works to consider the application in Vietnam The expectation would

be how to help the corporate governance regulations can approach more with international

principle so that the foreign investors do not need to spend much time and effort to adapt in

Vietnamese legal environment and vice-versa for the domestic investors when investing out

Although it is likely that there is not an ease to adopt similarly the role company

secretary as defined by Singapore’s regulations to Vietnam at the time being due to

underlying discrepancies in legislation and administrations regime between two nations, the

writer do hope that the thesis can serve as very initial ideas and recommendations so that

individuals, companies, and competent authorities who have concerns about this matter can

have references, discussions, and make more developments to build up and/or apply any

aspect herein to run an effective and transparent business and/or contribute to the reforms of

corporate governance in Vietnam soon or later

Key words: Corporate Governance, Company Secretary

INTRODUCTION

1 Reasons for adopting this topic

Vietnam is step-by-step integrating into the worldwide economy, completion of

the legal framework, especially for the field of corporate governance, has become a

significant element to set up foundation for stabilizing the Vietnamese economy for

both private and state sectors Enhancing the national competition index, ensuring the

transparency, integrity and compliance are top contemporary priorities of the

Government of Vietnam In light of that, the administrative authorities may explore by

taking reference from other countries’ models of corporate governance to see how can

apply into the current circumstances of Vietnam Dr Vu Bang, President of State

Securities Committee of Vietnam (“SSC”) said at the event “Building up roadmap

for corporate governance” organized by Hanoi Stock Exchange (“HNX”) - in

cooperation with Asia Development Bank - on 23 October 2015: “In the circumstance

we are opening our door and intergrating into the world economy, the corporate

governance becomes very necessary and urgent requirements”1 As also from statement

of Mr Tran Van Dung, Chairman cum General Director of Hanoi Stock Exchange at

this seminar: “while Vietnam is seeking for developing a model of corporate

governance, the same has been witnessed with a long progress at world level The

corporate governance matter is not only necessary matter, but also becomes very

urgently to be concerned The development of the corporate governance requires the

cooperation and coordination among business community, researchers, analyst, policy

makers, … HNX shall be together with companies in enhancing and improving quality

of corporate governance areas in Vietnam, providing base to increase the quality of

companies ‘governance, and improve the competitive capabilities of the enterprise, so

that the ranking of Vietnam in the financial world shall step up” 2

Singapore is a country in ASEAN with Vietnam, having high-developed and

successful market economy According to the most recent statistical report, its nominal

GDP increased to $410.3 billion in 2016, as compared to $408.1 billion in 20153

Singaporean citizen enjoy a various and healthy opened-market economy without

corruptions Currently, Singapore is a leading one actively in converting traditional

economy to intellectual economy with aim to become a top economy in the world in

2018 One of the reasons that brings the success to Singapore is its effective policy in

administering and controlling activities in investment and corporate, especially

adopting role of company secretary in accordance with international principles Such

role of company secretary somehow can be applied in Vietnam taking into account

recent Vietnam’s effort in enhancing corporate governance ability for Vietnamese

companies This secretarial role may expectedly contribute in setting firm foundation

in gradually bringing awareness of compliance and transparency culture to companies

in Vietnam Those reasons constitute main motivation for the author to adopt and write

up with the topic: “REGULATIONS OF COMPANY SECRETARY OF

SINGAPORE AND POSSIBILITIES TO APPLY IN VIETNAM”

2 Research questions

First research question: What is company secretary? Does the role of

company secretary help well with corporate governance in Singapore?

Second reseach question: Are current regulations of Vietnam available and

enforceable enough for ensuring a good corporate governance for Companies in

Vietnam?

Third research question: Should Vietnam consider applying company

secretary as a measure to improve corporate governance in Vietnam?

3 Legal circumtances for adopting research questions

3.1 Circumtances in relation to the first research question i.e “What is

company secretary? Does the role of company secretary help well with corporate

governance in Singapore?”

It is worth noting that not every country over the world does adopt the role of

company secretary and company secretary is not the one-and-only measure to ensure a

good corporate governance However, over time, it has been witnessed that the

company secretary has made a remarkable contribution in helping companies with

remaining a cohesive, transparent and compliant practice in terms of corporate

governance Nowadays, with an intensive integration in global economy which requires

a more consitency legal framework worldwide, this role is more intensively

recommended for application by large international organizations e.g WB, OECD

Singapore is a country adopting successfully international principles in creating

an effective corporate governance regime for its companies Among such mutiple

principles, company secretary is a small one but plays an important role in bringing

outstanding achievements to Singapore for its remarkable development in business and

legal framework, especially for field of corporate governance Although there are

certain difference in economic development level between Vietnam and Singapore,

study of Singapore’s company secretary role may be helpful in creating a similar

statutory company secretary or some responsibilties like that to enhance the corporate

governance in Vietnam That is the reason for the author to adopt the first research

question as: What is company secretary? Does the role of company secretary help well

with corporate governance in Singapore?”

3.2 Circumtances in relation to the second research question i.e “Should

Vietnam consider applying company secretary as a measure to improve corporate

governance in Vietnam?”

Government of Vietnam has recently raised concerns in enhancing the business

environment and needs of improving corporate governance by introducing a serie of

legal instruments in this field, particularly the Law on Enterprises 2014 and Decree

71/2017/ND9-CP dated 6 June 2017 providing guidance on corporate governance for

public company Despites of efforts in promulgating regulations over the time, real

implementation on corporate governance has not been seriously performed in Vietnam

by both state and company areas There has been increase of linitations and downsides

surfacing in terms of corporate governance that has not been properly dealt with It

would be necessary to have an analysis on what is happening and the reasons causing

such limitations and downsides so that approriate suggestions to improve may be

considered That is the reason for the author to adopt the second research question as:

“Are current regulations of Vietnam available and enforceable enough for ensuring

a good corporate governance for Companies in Vietnam?”

3.3 Circumtances in relation to the third research question i.e “Should

Vietnam take steps of applying company secretary as a measure to improve corporate

In consideration of recent efforts of Vietnam’s government in enhancing levels

of corporate governance in Vietnam and in view of the role of company secretary in

Singapore, the author provides a number of initiatives in how to gradually design and

apply the role of company secretary in Vietnam Given certain discrepancies in

economic development levels between Vietnam and Singapore, prudence in

approaching should be necessary That is the reasons for the author to adopt the third

research question as: Should Vietnam take steps to apply company secretary as a

measure to improve corporate governance in Vietnam?”

4 Purpose, objects and scope of research

The purpose of the thesis is to be a legal analysis with drawing out possiblities

to apply role of company secretary, which can be referenced to the one currently being

adopted by Singapore, into Vietnam as well as raising suggestions on how to apply this

role effectively in Vietnam

The scope of the topic is broad i.e spreading in areas covering regulations of

Vietnam on corporate governance, practical cases, current regulations of Singapore,

comments and opinions on the role of company secretary in Singapore The thesis also

employs analysis, figures, data provided by established international organisations such

as OECD, IFC in the same topic for illustration and reference

5 Methodology and theory framework

Methodologies referred and employed herein mostly comprise of methods for

study of economic science such as comparision, anaysis especially comparision

methods in legal system between Vietnam and Singapore, analysis of practical cases

existing in field of corporate governance in Vietnam, taking reference to expert

opinions, and then coming up with whether and how apply the role of company

secretary for companies in Vietnam

The topic includes 03 chapters which are for addressing 03 major research

questions Specifically:

CHAPTER 1: What is company secretary? the role of company secretary

and its benefit for corporate governance in Singapore

Chapter 1 includes 04 sections:

o Overview on company secretary under international principles;

o A brief of legal basis of company secretary under Singaporean laws;

o Analysis on cohesion between company secretary and good corporate

governance in Singapore; and

o Key notes

CHAPTER 2: Current regulations of Vietnam in corporate governance

Chapter 2 includes 03 sections:

o Brief of legal framework on corporate governance in Vietnam;

o Limitations in corporate governance in Vietnam – analysis on a number of

practical cases; and

o Key notes

CHAPTER 3: Applying company secretary as a measure to improve

corporate governance in Vietnam

Chapter 3 includes 03 sections:

o Needs in looking into role of company secretary for Vietnam;

o Step-by-step measures in applying company secretary in Vietnam; and

o Conclusions

6 Scientific meanings and value of the topic

The topic is expected to be a contribution of ideas to policy makers of state to

study more about the role of company secretary which can be referenced to the model

currently adopted by Singapore and/or other countries which bear similarities in legal

system to Vietnam so that Vietnam can improve effectively the field of corporate

governance and enhancing the ranking of Vietnam with respect to the competitiveness

at international level for ensuring the stable development of the economy

The topic definitely is not able to provide thoroughful analysis and

recommendations on all or each single matter stated herein The author, hence, do look

forward to contributions, comments from others in order to continue to develop this

topic to make it a completed one for application in future

CHAPTER 1: WHAT IS COMPANY SECRETARY? THE ROLE OF

COMPANY SECRETARY AND ITS BENEFIT FOR CORPORATE

GOVERNANCE IN SINGAPORE

1.1 Overview on company secretary under international principles

It is very easy to find a definition as broad term about company secretary e.g with

Wikipedia i.e “A company secretary is a senior position in a private sector company or

public sector organisation, normally in the form of a managerial position or above In large

American and Canadian publicly listed corporations, a company secretary is typically

named a corporate secretary or secretary” 4

With legal definition, one provided by Institute of Chartered Secretaries and

Administrators (ICSA) – a premier qualifying organisation for professionals aspiring to

become a chartered secretary, headquarter in United Kingdome as: “The company secretary

is a strategic position of considerable influence at the heart of governance operations within

an organisation”5

Definitions on company secretary are various depending on scope of corporate

governance area adopted and implemented by every single country Taking a reference from

regulations of Canada, company secretary’s duties can be defined as: “Within any

organization, a Corporate Secretary’s duties include ensuring the integrity of the

governance framework, being responsible for the efficient administration of a company,

ensuring compliance with statutory and regulatory requirements and implementing decisions

made by the Board of Directors” 6 Or according to Australia’s definition, scope of duties of

a company secretary is: “The Company Secretary plays a crucial role in the governance of

the company, the board’s discharge of its leadership in this vital area and in the discharge

of individual director’s duties” 7

With reference to a publication by IFC – an organization under the World Bank

named: “The Corporate Secretary: The Governance Professional” published in 2016 with an

aim to introduce and highlight the important role of corporate secretary in corporate

governance matters, the scope of works of the corporate secretary including ensuring the

company’s structure and compliance of policy of company and regulations - has been

illustrated in the following diagram as below:

In another diagram, the roles of the corporate secretary are also listed out as follows:

Source: Organizations and corporate structure

The Corporate Secretary: the governance professional – publication

of IFC, 2016

Company Secretary

Manage the corporate governance framework

Ensure compliance with governance procedures

Communicate with Directors

Communication between board and management

Shareholders relations &

Manage shareholder meetings

Conscience of the Company

Officers of the Company

for newly directors

Source: IFC corporate secretary toolkit, 2013

As depicted above, it can be seen that company secretary’s role will vary from

organization to organization, depending on the type of organization, thesector it operates in,

and the structures, policies, and procedures it adopts The above table shows some of the

duties often carried out by the corporate secretary Whatever type of organization the

corporate secretary works for, he or she usually plays a valuable role as a “bridge” for

information, communication, advice, and arbitration between the board and management and

the organization and its stakeholders, including its shareholders The company secretary can,

among other things, help management understand the requirements of the board, help the

board understand the challenges faced by management in meeting the requirements of the

board, and help the organization manage stakeholder relations

The role of the company secretary, therefore, involves, in addition to a compliance

role, the management of people to create the appropriate cultures to enable the corporate

governance structures, policies, and procedures to work effectively Unfortunately, as

evidenced by corporate governance scandals across the globe, many carrying out the role of

governance professional within organizations do not get this They believe that just by

complying with best”8

The important role of corporate secretary is also reflected in a speech by David

Jackson, Corporate Secretary, BP PLC in the publication “The Corporate Secretary: The

Governance Professional” published in 2016: “ In today’s world, the role of the Corporate

Secretary has no one meaning and covers a multitude of tasks and responsibilities That said,

the role lies at the heart of the governance systems of companies and is receiving ever great

focus” 9

Indeed, with such valuable and bridging role, contribution by the corporate secretary

to the corporate governance matter have also been supported by IFC’s statistics as follows:

In terms of contribution to enhancement of company’s effectiveness:

8 IFC, (2016), The Corporate Secretary: The Governance Professional, IFC & WB as Publishers, p.4

9 IFC, (2016), The Corporate Secretary: The Governance Professional”, IFC & WB as Publishers, p.1

In terms of importance of corporate secretary to various types of companies:

In terms of bridging of channels within involving parties:

The above of illustrations raise up a broad scope of duties of a company secretary in

view of a number of of large international professional organisations in the world The aim

is that if all the duties and functions of that company secretary can be fully implemented, the

companies shall be brought with a proper and effective corporate governance regime for

itself that would mitigate potential risks in misconducts and/or remove internal conflict of

interest circumstances and/or any other hidden issues inside or outside the companies

Company secretary, itself, cannot be considered as the only one key function in field of

corporate governance but shall need to be integrated and combined with other multiple roles,

specially the roles of board of directors Company secretary, somehow, can serve as a

supportive mean to ensure the company to be sailed in a correct ways as required by laws

and shareholders

1.2 Brief of legal basis of company secretary under Singaporean laws

Up till this date, Singapore has been paying due attention to field of corporate

governance Regulations and enforcement approaches in that field are available in variety of

legal instruments With very high-level consistence, those regulatory requirements play

crucial roles to ensure the compliance and transperancy of companies in Singapore Lists of

legal instruments in this area can be named as follows:10

10 OECD, (2014), Singapore - The corporate governance framework and practices relating to risk

management, , OECD Publishers, p.52.

Internal documents From companies to shareholders From Board of Management to Board of…

For meeting of Board of Management

Percentage of parties where Corporate secretary helps to bridge

information

Source: Surveys by IFC-RID on Corporate secretary works, April 2013

Date Measures

March 2001 The Corporate Governance Code was first issued by the

Corporate Governance Committee January 2003 The Corporate Governance Code entered into force For

general shareholder meeting held from 01 January 2003, listed Companies are required to describe in annual reports their governance practices with specific reference to the Code

July 2005 The revised Code was issued following the review by the

Council on Corporate Disclosure and Governance October 2008 The Guide Book for Audit Committee was issued by the

industry-led Audit Committee July 2011 ACRA launched its first handbook for Director title “Being

an Effective Director”

April 2012 SGX updated the listing manual to bring into the listing

requirements both the need for adequate internal controls and a specific opinion from the board on the adequacy of the internal controls

May 2012 MAS issued a revised Code of Corporate Governance

(Code) following a comprehensive review of the 2005 Code

by the Corporate Governance Council The Code replaced the 2005 Code

Key issued addressed by the revised Code include:

 The clarification of director independence and

multiple directorships [The code clarified the definition of independent directors by requiring independence from substantial shareholders (10%

shareholding) as well as defining a reference period

of the length of term beyond which a director’s independence should be revalidated (9 years)

 The enhancement of risk management and internal

controls

 The enhancement of disclosure on remuneration

practices May 2012 The council issued a risk Governance Guidance for Listed

Boards (“Guidance”) to provide further guidance on the Board’s role on risk governance via-à-vis the Code

Since 1967 – the first year in which the Company Act took effect and recognised the

role of company secretary as an company officer governing corporate governance in

Singapore With that, Company secretary would undertake the supervision and exercise of

compliance and management works in accordance with the Company’s charter,

commitments of shareholders and statutory requirements of Singapore

Singapore did apply fully international principles in corporate governance offered by

IFC Singapore in their domestic regulations11:

Jurisdictions Key National

Corporate Governance code and principles

Update – (Latest)

Approach C/E:

comply or explain B: binding V:

voluntary

Disclosure

in annual company report or corporate governance report

Basis for framework L: Law or regulations LR: Listing rule

Surveillance SR:

Securities regulator SE: Stock exchange P: Private institution CB: Central Bank

Singapore The Code of

Corporate Governance

2012 C/E Yes LR SR and SE

It can be noted that the Singapore Companies Act doesn’t define the role, duties and

responsibilities of a company secretary, “he” or “she” is defined as an officer who is

primarily responsible for administrative and reporting functions mandated by law Hence,

major duties of company secretary under Singaporean laws are to assist the company

11 OECD, (2017), – Survey - Corporate Governance Framework Asia, OECD Publisher, p.14

directors in ensuring that the company meets all its regulatory obligations The term of

regulatory obligations is broad that would include a a lot functions which according to ACRA

of Singapore shall vary as follows12:

o Maintain the company statutory registers and records;

o Arrange for shareholder and director meetings;

o Lodge and file in time all necessary documents required by law;

o Provide administrative support in preparation of meetings;

o Provide comprehensive legal and administrative support to the board;

o Assist in the implementation of corporate strategies by ensuring that the board’s

decisions are properly carried out and communicated;

o Ensure that the company meets all its legal obligations;

o Stay updated on relevant developments and changes in statutory and regulatory

obligations; and

o Communicate adequately with shareholders

Company secretary is currently governed and stipulated at Section 171, Company

Act – Singapore, which provides that within 06 months from the establishment date, newly

in corporated company in Singapore must appoint company secretary

Section 157, Company Act of Singapore considers company secretary as an “officer”

as well as the associated duties, specifically13:

(2) An officer or agent of a company shall not make improper use of his position as an officer or agent of the company or any information acquired by virtue of his

position as an officer or agent of the company to gain, directly or indirectly, an advantage

for himself or for any other person or to cause detriment to the company

Scope of duties of company secretary under regulations of Singapore is wide,

however, as in light of international principles and standards e.g OECD, IFC, major roles of

company secretary are as follows:

Appointment of company secretary is stipulated in Company Act Specifically14 :

12 https://www.singaporecompanyincorporation.sg/how-to/incorporate/singapore-company-secretary/

13 Section 157, Company Act, Singapore

 According to Item 1, Section 171, Company Act, company secretary must be

Singapore residents (including ones having Singaporean nationality, ones having Permanent

Resident and ones having Entre Pass Holders);

 Section 1A also stipulates that company secretary are required to have

knowledge and experience to undertake the role With respect to listed company, ACRA also

provide more stringent requirements for company secretary, specifically:

Person who is apppointed to be company secretary must need to meet one or more

with the following conditions:15

 Been a secretary of a company for at least 3 of the 5 years immediately before his

appointment as secretary of the public company;

 Qualified person under the Legal Profession Act (Cap 161);

 Public accountant registered under the Accountants Act (Cap 2);

 Member of the Institute of Certified Public Accountants of Singapore;

 Member of the Singapore Association of the Institute of Chartered Secretaries

and Administrators;

 Member of the Association of International Accountants (Singapore Branch); and

 Member of the Institute of Company Accountants, Singapore

Company secretary is individually liable for and subject to statutory sanctions if

violating regulations during his/her course of exercising her role as company secretary as

follows:

Administrative penalty and criminal charges

Under Company Act, an officer or agent (including a Company secretary) who

commits a breach of any of the provisions of this section shall be —

(a) liable to the company for any profit made by him or for any damage suffered by

the company as a result of the breach of any of those provisions; and

(b) guilty of an offence and shall be liable on conviction to a fine not exceeding

$5,000 or to imprisonment for a term not exceeding 12 months

15 Section 171 (1AA), Company Act, Singapore

Debarment

Certain violation in acting as company secretary in singapore may cause to

debarment, specifically16:

 Where the Registrar is satisfied that a company is in default in relation to a

relevant requirement of this Act, the Registrar may make a debarment order against any

person who, at the time the order is made, is a director or secretary of the Company

 Subject to subsection (3), a person who has a debarment order made against

him shall not _

(a) except in respect of a company of which the person is a director immediately before the order was made, act as director of any company; or

(b) except in respect of a company of which the person is a secretary immediately before the order was made, act as secretary of any company

 The Debarment order applied from the date that the order is made and continues

in force until the Registrar cancels or suspends the order

 The Registrar may, upon the application of a person who has a debarment order

made against him or on his own accord, cancel or suspend such debarment order where the

default in relation to the relevant requirements of this Act as at the time the debarment order

is made has been rectified or on such other ground as may be prescribed, subject to such

conditions as the Registrar may impose

In Singapore, there are a number of instituions and governmental agency providing

training courses, and/or govrning the practice of company secretary In particular:

ACRA17

Founded: April 1, 2004, The Accounting and Corporate Regulatory Authority is a

statutory board under the Ministry of Finance of the Singapore Government ACRA is the

national regulator of business entities, public accountants and corporate service providers in

Singapore

16 Section 155B, Company Act, Singapore

The Singapore Association of the Institute of Chartered Secretaries and

Administrators (SAICSA) is a division of ICSA and comprises members, graduates and

registered students of the Institute residing in Singapore All members are in public listed

and private limited companies, corporate secretarial firms, legal practices, international

accounting firms, tertiary institution, civil service and government regulatory bodies

One of the aims of the Association is to promote and advance efficient administration in the

corporate world and industry through the development of the study and practice in chartered

secretaryship and professional administration

1.3 Analysis on cohesion between company secretary and good corporate

governance in Singapore

According to rankings in corporate governance announced by Asian Corporate

Governance Association (ACGA), an independent, non- profit organisation based in Hong

Kong and working on behalf of all investors and other interested parties to improve

corporate governance practices in Asia, the corporate governance of Singapore is

consistently top ranked by years, specifically:

Corporate Governance Watch Market Score: 2010 - 2016

Source: Asian Corporate Governance Association, (2016), survey and ranking, p.12

A good corporate governance requires involvements of various parties focusing on

core management principles which are provided by laws and internal constitutions within

18 http://www.saicsa.org.sg/english/aboutsaicsa/aboutsaicsa.asp

the companies When a company secretary, as an independent and high-level specialised

role in ensuring corporate governance of the companies in Singapore can perfoms properly

with his duties, all functions of corporate governance would be ensured and facilitate the

companies in terms of compliance matters, transperancy, and coordination The company

secretary in Singapore has contributed to a good corporate governance with the below

aspects:

 Assurance the compliance works with competent authorities, especially 19

(ACRA - Accounting And Corporate Regulatory Authority)

With role of company secretary, the routine administrative works (notice, reporting,

filing on monthly, quarterly and annually) or arisen information from any events within the

company such as information in relation to shareholders, management positions, company

secretary, value of shares/capital, transfers of shares, company head-office, etc have been

noticed to authotities compliantly and duly20 This very much helps the concerning parties

with being keeping posted regularly on changes of the company’s information that

enhancing their confidence in the operation of the company

 Undertaking implements provisions stipulated in the Company’s

charter/article of associations

This role is designated to ensure the oversight on the execution of members of Board

of Directors, other executive positions as per the company’s charter and/or policy approved

by shareholders The duties also include the implementation of resolutions, decisions issued

by board of shareholders, board of directors, etc to ensure that those resolutions, decisions

are totally in effect and enforced In addition, role of company secretary is also to ensure

the compliance in convening meetings within company (AGM, or extraordinary meetings)

such as procedures to call meetings, rule of voting, rule of passing resolutions This duty

also includes rights to amend provisions of charter of upon the company’s

resolutions/decisions and notice timely to ACRA of those changes21 This plays an critical

role in directing the Company to be on a right way of operations as set out the company’s

shareholders and the laws

 Retention of company documents and information

19 https://www.acra.gov.sg

20 IFC, (2016), The Corporate Secretary: the governance professional, IFC Publisher, p.7

In addition to duties of registering/noticing of new information to ACRA, company

secretary is also responsible for retention and custody of all information in relation to

shareholders, board of executive, capital ratio, fianancial statements, operational reports,

other company information, etc to ensure information are kept safely and thoroughly during

its course of operation duration22 This helps the Company with enhancing the transperancy

with availability of all the historical documents in relation to the company time over time

 Convening annual meetings or extraordinary meeting of shareholders, board

of excutive in line with company’s charter

In accordance with law of Singapore, company – in all kinds of form, is required to

hold at least one meeting annually And up to the needs of operation, company may organise

other ordinary meetings - which shall be stated in the Company’s charter The company’s

charter also provides procedures of organising meetings, voting rules, passing rules,

implementations of resolutions, etc Company secretary must participate in those meetings

to make minutes, keep all meeting minutes, resolutions as well as supervision of

implementation of the resolutions of all relevant parties in the Company23 This role helps

the organisational manner of the company are highly regarded by all parties and accordingly

enhance the enforcement of all resolutions/decisions resolved or passed by board of

executive/shareholders of the Company

 Duties of connection 24

Company secretary is a center ensuring the compliance One of which is to submit

timely statutory reports to competent authorities, hence it will serve as a connetion with

other divisions within company to remind, cooperate and coordinate the completion of such

compliance works e.g submission of financial reports, tax returns, operational reports, etc

This also includes control of the company’ seal to ensure all legal documents of the company

shall be chopped and issued properly and legally

Appointment and maintenance of company secretary under law of Singapore (and in

other countries) can ensure practical rights and requirements of people/organisations

22 IFC, (2016), The Corporate Secretary: the governance professional, IFC Publisher, p.11

23 IFC, (2016), The Corporate Secretary: the governance professional, IFC Publisher, p.11

24 IFC, (2016), The Corporate Secretary: the governance professional, IFC Publisher, p.11

involving in economic activities which are various among shareholders, directors,

authorities, etc Particularly, role of company secretary shall ensure the following benefit:

 Transperancy in investment activities between shareholders/owners

With a duty of recording, updating and registering any change of information of the

company shareholders, hence, company secretary holds the authorities to ensure all the

changes/developments in ownership must be in line with regulations This shall help with

limiting any hidden and negative activities among shareholders to influence or acquire the

company illegally This role is really meaninful to minor shareholders in various aspects

including their rights to approach and to be supplied sufficent and accurate information in

relation to the company

 Internal compliance with company’s policy 25

The compliance for a company normally comprises two major aspects i.e internal

compliance and external compliance Role of company secretary may help shareholders

with assuring that all their resolutions/decisions shall be executed properly by the Company

board of executive in line with the business plans, strategies and targets In addition,

company secretary also helps the board of executive with supervising and controlling other

company’s divisions to comply with their commands/instructions to ensure the company’s

operations

 Compliance with regulations 26

In addition to internal compliance, company secretary also helps with ensure the

external compliance by performing, supervising and reporting all statutory requirements to

competent authorities The full compliance in meeting external regulations plays an

important role in showing how a company operates i.e with or without transperancy

 Consultations to company’s plans and strategy 27

Together with legal division (some company may have or do not have since

regulations of Singapore do not require), company secretary are ones who having

knowledge in regulatory requirements, hence, they may help with providing comments,

supervision and control of operational plan, etc in order to assure that all the relevant

matters are compliant

25 IFC, (2016), The Corporate Secretary: the governance professional, IFC, Publisher, p.82

26 IFC, (2016), The Corporate Secretary: the governance professional, IFC Publisher, p.82

 Ensuring that all the company’s legal documents and value are kept by

thoroughly by time 28

Company secretary are well trained professionals in multiple legal fields and has well

understanding on value of each type of legal documents, secretarial skills in organisation

and restore, extract and provide information to requesting parties The company data,

documents are, accordingly, kept safely and sufficiently over the time during or even after

the lifetime of company

 Ensuring the specialisation – increase operational effectiveness of the

Company

When companies moves up to a certain level, specialisation plays an important role

in ensuring the efficieny and effectiveness during the course of operation A Company’s

director can not perform multiple duties at the same time such as executive, controllers,

finance-accounting, etc as well as ensuring the compliance of the Company The multiple

roles, if any, shall cause the Company to be over-controlled or hidden risks A company

secretary, with an independent role, helps with specialise in providing guanrantee to

maintain the compliance for the company so that the board of executive, board of directors

are more relaxed to focus on the management and execution only

 Increase commercial value for the company 29

With benefit of transperancy, compliance of the parties in investment and business

activities thorough the life of the company, the presence and operation of company secretary

shall increase intangible value of the company When the company enters into an M&A,

such good corporate governance system can help the company’s value to be more

competitive and valuated at higher value than if the company does not have any

In another aspect, when there is an M&A transaction, the due diligence and valuation

shall cause all parties time and cost to assess the compliance level of the target A high-level

compliant target can help parties complete the assessment process quickly, save time and as

well as add more value to the sale

1.4 Key notes

It is no doubt that Singapore is a country with high-level legal and enforcement

systems in all fields, especially the field of corporate governance It is worth noting that

28 IFC, (2016), The Corporate Secretary: the governance professional, IFC Publisher, p.17

29 IFC, (2016), The Corporate Secretary: the governance professional, IFC Publisher, p.111

over 2010 to 2016, Singapore has consistently been at top 1 as being ranked by Asian

Corporate Governance Association (ACGA), an independent, non- profit organisation based

in Hong Kong and working on behalf of all investors and other interested parties to improve

corporate governance practices in Asia30

Hence, it would be necessary and worthy to take reference from regulations on

corporate governance and company secretary of Singapore to study on how it can be applied

in Vietnam with the aim at improving the transperancy and compliance in business and

corporate environment in Vietnam

CHAPTER 2: CURRENT REGULATIONS OF VIETNAM IN

CORPORATE GOVERNANCE

At a glance, there have been recently positive step-ups in terms of economic

development in generall, and corporate governance in particular, of Vietnam

However, in comparison with other developed economies, Vietnam still belongs to

low-developed ones According to the Doing Business 2016 report made by World

Bank Group (which provides ranking of the surveyed countries by 10 conditions),

Vietnam has ranked at 90/189, stepped up with 03 steps in comparison with 201531

In terms of corporate governance, according to another report issued by VCCI

in 2014, the average ranking of corporate governance ability of Vietnamese companies

was 35,1, significantly lower than Thailand (84,5), Malaysia (75,2), Singapore (70,7)

or Indonesia (57,3)32

Another the event was that Vietnam did not have any company to be named in

the list of top 50 companies with best corporate governance in ASEAN 2015, an

scorecard/event annually organised by Joint Initiative of the Asean Capital Markets

Forum And The Asian Development Bank33

In view of the above, it can be seen that Vietnam is not yet able to create and

maintain a good corporate governance regime for itself It is a fact that Vietnamese

companies are characterised (i) with weak corporate governance in which the relations

between shareholders, directors, inspectors almost rely on personal trusts while (ii)

legal frameworks also do not supply sufficient tools and (iii) enforceable judical

procedures so that each element of it can rely and be safely protected In addition,

most of business in Vietnam are small and medium-sized companies are majority,

hence, sufficient and serious awareness of necessity and enforcement of corporate

governance requirements have not been duly cared In order to understand fully the

current circumstances, it would be worthy to look back the history of regulations on

companies and corporate governance of Vietnam

31 VCCI, (2015), Annual report - Tendency of change of form of enterprise in Vietnam, VCCI, p.9

32 VCCI, (2014), Report on ranking of Vietnamese company on corporate governance, VCCI, p.4

33 ADP, (2015), Asean Corporate Governance Scorecard country reports and assessments, ADP

Publishing