The National Corporate Secretaries Association sees the creation of values and prospects for the development of corporate governance in Russia as one of its goals. Since an important task on the way to achieving this goal is to study the world experience in this area, the NCSA – International Relations Committee conducted an overview study of corporate legislation and corporate governance in Vietnam.
In modern conditions, no state in the world can exist in isolation, and therefore companies must be ready to enter international markets for products, services and investments. Vietnam is no exception, so the business community needs to study relevant world practices and implement them taking into account national characteristics and interests.
One of the areas of improvement — corporate governance — is the most important tool for ensuring the sustainability of companies and their long-term successful development.
Corporate legislation and corporate governance in Vietnam are, in general, at the stage of formation, which can be considered, among other things, as a positive factor that makes it possible to determine the most effective direction of future development. At the same time, quite a long way has been passed since 1986, and many stages of this path make the development of corporate law and governance in Vietnam similar to similar processes that took place in Russia around the same time period.
The main features of corporate governance in Vietnam companies
Concentrated ownership – many companies are owned by a single controlling shareholder, family members, or a small group of shareholders
Insufficient separation of ownership and control — controlling shareholders are often also the CEO of the company and/or are on its board of directors
A controlling stake in companies belonging to the most significant sectors of the economy often belongs to the state
Large holding structures, especially in the public sector
The growing experience of members of management bodies, the increasing individualization of corporate governance systems of individual companies
These features lead to a decrease in supervisory activities and transparency, complication of corporate processes, and as a result — a certain decrease in the investment attractiveness of companies. At the same time, shareholders keep better control, the security of their assets is increased, which is quite justified, taking into account the processes currently taking place in the international sphere.
It is generally recognized that corporate governance plays a crucial role in emerging markets, where the legal framework is relatively new and investors, in addition to the legal remedies provided, need to carefully evaluate the mechanisms provided by the corporate governance system of a particular company. And this is a positive factor for the development of Vietnam’s stock market, since even minor improvements in corporate governance can be of great importance to investors.
Vietnamese companies need to improve corporate governance, including increasing transparency, strengthening investor protection and improving regulatory mechanisms, paying special attention to maintaining a balance between integration into international investment processes and protecting their national interests.
Professional associations, such as the National Corporate Secretaries Association, traditionally play an important role in promoting the best practices of corporate governance in many countries, which means that similar experience can be effectively applied in Vietnam.
The ways of developing corporate law and governance in Vietnam and Russia are similar in a number of ways — the exchange of experience is relevant for our countries. Successful adaptation and application of this experience, taking into account national peculiarities, can positively affect the development of stock markets and improve the investment attractiveness of companies in both countries.