Vietnam’s first-ever Corporate Governance Code of Best Practices for Public Companies has been introduced by the State Securities Commission of Vietnam on August 13, aimed at aiding further development of the capital market.
The code was developed with technical support from the International Finance Corporation (IFC), a member of the World Bank Group, and in partnership with the Swiss State Secretariat for Economic Affairs (SECO).
It lays out a series of recommendations on best corporate governance practices, primarily for Vietnamese public companies. It includes standards which go beyond the minimum legal and regulatory requirements, encouraging companies to move towards international best practices. In addition, it is supposed to help Vietnam align with its ASEAN peers, which have long instituted similar codes.
“This code is the most recent effort to support public and listed companies in aspiring to international corporate governance standards, which will help raise the quality of companies listed on our stock exchanges,” said Tran Van Dung, chairman of State Securities Commission (SSC).
“The ultimate goal is to promote investor confidence and grow the Vietnamese capital markets, which will help fuel the sustainable development of the national economy.”
As the issuer of this code, SSC, along with the Ho Chi Minh and Hanoi stock exchanges, will use it to promote good corporate governance practices, and shall monitor the voluntary adoption of the code by companies.
The code consists of ten principles with detailed recommendations for best practices, aimed at addressing priority issues incorporate governance performance by Vietnamese companies. Among the ten principles, six are focused on the functioning of the board of directors, which is an area that requires further improvement in many Vietnamese firms. The remaining four principles cover areas such as control environment, transparency and disclosure, shareholder rights and stakeholder relations. The code also includes provisions relating to responsible business, such as promoting gender diversity and encouraging a stronger focus on environmental and social issues.
“Good corporate governance attracts capital,” said Philippe Le Houérou, CEO of IFC. “Investors have greater confidence in companies with good corporate governance and in markets that are backed by sound legal and regulatory regimes. This Corporate Governance Code of Best Practices can help Vietnamese companies send a signal to investors to come and do business in Vietnam.”
While the code is mainly aimed at guiding good governance practices for Vietnamese public and listed companies, other organisations can also make use of the code as a benchmark for best practices.
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