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VIETNAM ACADEMY OF SOCIAL SCIENCES
GRADUATE ACADEMY OF SOCIAL SCIENCES
L

TRAN LUONG DUC

THE GOVERNANCE OF PUBLIC COMPANIES
UNDER THE VIETNAMESE LAW NOWADAYS

Major: Economic Law
Major code: 9.38.01.07

SUMMARY OF THE DOCTORAL DISSERTATION IN LAW

Hanoi - 2019


The dissertation completed at Graduate Academy of Social Sciences,
Vietnam Academy of Social Sciences

Supervisors:

1. Assoc. Prof. Dr. Nguyen Nhu Phat
2. Assoc. Prof. Dr. Duong Duc Chinh

Reviewer 1: Assoc. Prof. Dr. Tang Van Nghia
Reviewer 2: Assoc. Prof. Dr. Bui Thi Huyen
Reviewer 3: Assoc. Prof. Dr. Duong Dang Hue

The dissertation will be defended at Graduate Academy Level Council of
dissertation assessment at Graduate Academy of Social Sciences, Vietnam

Academy of Social Sciences, 477 Nguyen Trai, Thanh Xuan, Hanoi.
Time: ………… date ………. month …… …year 2019

The dissertation may be found at:
- Vietnam National Library;
- Graduate Academy of Social Sciences Library


INTRODUCTION
1. The necessity of the research topic
In Vietnam, the legal framework for public company governance is
basically mentioned in the 2005 Law on Enterprises, the 2014 Law on
Enterprises, the 2006 Law on Securities, the Law on amending and
supplementing a number of Articles of the 2012 Law on Securities, Decrees
guiding the implementation of the Law on enterprises, the Law on securities,
and documents guiding the implementation, have shown quite fully the need to
adjust the law in this field.
Actually, however, the current legal framework for public company
governance in our country has still many gaps, not really protecting the
legitimate rights and interests of shareholders and the consequence is that a
deep division among groups of shareholders in the company as a basis for
large-scale mergers and acquisitions. To overcome these limitations, it is
necessary to improve the efficiency of law enforcement of public company
governance, strengthen the role and capacity of securities market management
agencies; continue to improve legal regulations on corporate governance. By
examining comprehensively “The governance of public companies under the
Vietnamese law nowadays” will contribute to further interpret scientifically
public company governance and propose some solutions to improve the
provisions of the law on corporate governance in general and public company
governance in particular in Vietnam.

2. Research purpose and tasks
2.1. Research purpose
The research purpose of the dissertation is based on the results of
interpretation of theoretical and practical basis of legal regulations on public
company governance in our country, and on the basis of comparison and
reference to mechanism of public company governance under the law of some
countries around the world and general practices so as to make
recommendations to improve and enhance the effectiveness of the law on
public company governance in Vietnam today.
2.2. Research tasks
The dissertation seeks to clarify the following tasks:
- Analyzing concepts, characteristics and contents of corporate governance
in general and public companies in particular. Analyzing and assessing the
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need to adjust by the law of corporate governance relations, the legal regime
for public company governance in the legal documents, priciples of
management, internal organizational structure, advantages and disadvantages
of public companies, and referring and analyzing the legal structure of public
company governance.
- On the basis of comparison with regulations on public company
governance under the international practices and laws, the study analyzes and
clarifies characteristics of public company governance in Vietnam.
- Analyzing and evaluating the legal framework on public company
governance in Vietnam which prescribed by the Law on Enterprises, the Law
on Securities and other relevant legal documents; the reality of application and
enforcement of these laws by public companies and relevant agencies and
organizations; and then identifying the strengths and weaknesses of these laws.
- Clarifying the necessity and objectivity of improving the law on public

company governance, and proposing recommendations and solutions to
improve the efficiency of public company governance under the Vietnamese
law.
3. Research subjects and scope
3.1. Research subjects
The research subjects of the dissertation are opinions, jurisprudence,
models of corporate governance in general and public company governance in
particular; Vietnamese legal documents on public company governance;
OECD’s governance principles, foreign laws on public company governance;
practices of developing, applying and enforcing the law on public company
governance in Vietnam.
3.2. Research scope
- Regarding contents
The dissertation just analyzes and evaluates the provisions of the law on
public company governance which stipulated by the Law on Enterprises, the
Law on Securities and relevant legal documents. The study analyzes the
provisions of the law on shareholder’s rights and protection of shareholder’s
rights; management apparatus and power division in the company; the law of
preventing and resolving interest conflicts, self-interested transactions;
transparency and information disclosure; inspection, supervision and handling
of violations.
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- Spatially and time
+ Spatially: the dissertation just examines theoretical and practical issues of
the law on public company governance in Vietnam, in which, having
comparisons, experiences of some countries on building and enforcing law on
public company governance.
+ Regarding time: the dissertation just examines issues since 2006 (since

the 2005 Law on Enterprises took effect).
4. Methodology and research methods
4.1. Methodology
In order to clarify the research issues, the dissertation based on
methodology of Marxism-Leninism on dialectical and historical materialism,
the State and the Party’s points of view on economic development in the
innovation period.
4.2. Research methods
- Method of analysis and synthesis: This method is used in all chapters of
the dissertation. Specifically, it is used to learn and present phenomena,
viewpoints, contents, elements of public company governance and the law on
public company governance; analyze and draw out perspectives, regulations
and operation of corporate governance and Vietnamese law on public company
governance; thenceforth, the study presents assessment, conclusion,
recommendations and suitable solutions to improve the provisions of the law.
- Systematical method is used in all chapters and sections of the dissertation
to turn contents and each issue of the dissertation into a perfect whole with
reasonable layout, coherence, inherit and develop issues and contents to
achieve research purposes of the dissertation.
- Method of comparative law: this method is mainly used in chapter 2 and
3. Specifically, it is used to refer principles, practices and good guidelines on
corporate governance and experiences in building and improving the law on
public company governance of some countries around the world, and OECD’s
corporate governance principles.
5. New contributions of the dissertation
The dissertation is an intensive, comprehensive and systematic research
work on the issues of corporate governance in general, the provisions of the
existing law on public company governance in both theoretically and
practically and expressed in the following contents:
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- Examining systematically and interpret based on theoretical and practical
basis of concepts, legal and scientific foundation, the law and issues related to
public company governance.
- Evaluating correctly and accurately the current status of the provisions of
the law on public company governance in Vietnam. It also points out
inadequacies and shortcomings of this issue.
- Examining experience of some countries around the world in building and
improving the law on public company governance.
- Identifying scientific arguments for improving the law of Vietnam on
public corporate governance and propose some suggestions and solutions to
improve the Vietnamese law on public company governance.
6. Theoretical and practical significance of the dissertation
- Theoretically: The dissertation is a systematic, comprehensive and
intensive research work on theoretical issues of public company governance.
By modern and appropriate research methods, the study explains theoretical
and practical issues, it analyzes and evaluates theoretical issues, basis and form
of the law on public company governance, thenceforth, it draws conclusions
about the content of the law on public company governance in Vietnam today.
- Practically: the dissertation makes objective comments and assessment,
reasons and results as well as limitations of the law on public company
governance. The dissertation’s results, especially theoretical and practical
issues in comparison to foreign law will contribute to making
recommendations to ensure to correctly apply and build the provisions of the
law on public companies consistent with the socio-economic development of
Vietnam.
The opinions and solutions to improve the Vietnamese law on public
company governance in this dissertation may be a reference for legislators and
competent authorities in completing the law on public corporate governance in

Vietnam. The dissertation is also a reference for studying, researching and
teaching law on corporate governance.
7. Structure of the dissertation
Besides the introduction, conclusion and references, the dissertation
includes 4 chapters:
Chapter 1: Literature review

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Chapter 2: The theoretical issues and the law on public company
governance
Chapter 3: The reality of the law on public company governance in
Vietnam
Chapter 4: Directions and solutions to improve the law on public company
governance in Vietnam
Chapter 1
LITERATURE REVIEW
1.1. Research situation
1.1.1. Research works on theoretical issues on corporate governance
“Corporate governance” by Christine A. Allin gave an overview of
corporate governance issues. The author has summarized, analyzed and
evaluated some basic theories on corporate governance, the role of
shareholders and parties related to corporate governance, and studying
ownership structure of types of companies; structure of internal governance
such as the roles, powers and responsibilities of the Board of Management
(BOM), Director, Chairman of BOM, members of BOM and secretary.
“Theories of Corporate Governance. The Philosophical Foundation of
Corporate Governance” by Clarke. T. also has a similar approach.
“Corporate Governance: Principles, Policies, and Practices” by Bob

Tricker and “Corporate Governance: Theories, Principles, and Practices” by
John Farrar referred to legal issues on corporate governance such as the
distribution of power between BOM and General Meeting of Shareholders, the
legal status of BOM, obligations of the manager; rights and obligations of
shareholders; transparency and the role of auditors and the audit committee in
corporate governance.
“Comparative Company Law: Text and Cases on the Laws Governing
Corporations in Germany, the UK and the US” by Andreas Cahn and David C.
Donald and “European Comparative Company Law” by Mads Andenas and
Frank Wooldridge approached from the perspective of comparing law of
countries in terms of establishment; types of companies in each country; equity
capital and loan; management and administration; the involvement of
employees in corporate governance.
In addition to foreign documents, there are also many research works on
corporate governance in Vietnam. “Corporate governance: improving
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competitiveness and access to capital in the global market” by Ira M.Millstein,
Michel Albert, Sir Adrrian Cadbury, Transport Publishing House, 1998. This
book is considered a report to submit to the OECD led by Ira M. Milstein.
“Monograph of economic law” by Pham Duy Nghia, Hanoi National
University Publishing House, 2004. This book gives an overview of Vietnam’s
economic law, especially it introduces the concept and meaning of corporate
governance. “The law on enterprises – capital and management in the joint
stock companies” by Nguyen Ngoc Bich (2004, 2009), Youth Publishing
House, HCMC. This book presents what the law on enterprises stipulates on
capital and management of joint stock companies. In this book, the author
explains the issues of corporate governance in one chapter (the author uses the
term “driving the company”).

In sum, in these research works, the theoretical issues on corporate
governance have been presented in detail, from different perspectives such as
the history of corporate governance, theories of corporate governance, the
concept of corporate governance, as well as elements and models of corporate
governance and major contents of the law on corporate governance. These
research findings are the basis for comparison, analysis and evaluation in the
dissertation so as to build a system of theoretical bases and grounds to assess
practical activities and experiences to improve the law on public company
governance in Vietnam.
1.1.2. Research works on the reality of the law on corporate governance
Based on the theoretical basis of corporate governance, the book
“Corporate Governance: Theories, Principles, and Practices” by John Farrar
examines the provisions of the law on corporate governance based on the legal
provisions on the roles of shareholders and parties related to corporate
governance, rights and obligations to study the ownership structure of various
types of companies and the internal governance structure. By similarly
approaching, the book “Corporate Governance: Principles, Policies, and
Practices” by Bob Tricker examines the legal provisions on corporate
governance of the UK and the US, or the book “Corporate Governance:
Theories, Principles, and Practices” by John Farrar examines the legal
provisions on corporate governance of Australia and New Zealand. These
research works provide an overview of the provisions of the law on corporate

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governance of countries as a basis for the dissertation to compare and learn
experiences of other countries.
By considering corporate governance as an internal element of the
company, the book “Comparative Company Law: Text and Cases on the Laws

Governing Corporations in Germany, the UK and the USA” by Andreas Cahn
and David C. Donald or the book “European Comparative Company Law” by
Mads Andenas and Frank Wooldridge provided an overview of the law on
enterprises of German, the UK and the US, in which, they compare to
provisions of the law on enterprises in each aspect of corporate governance of
these countries.
Foreign research works on corporate governance related to Vietnam,
namely:
“Public Enforcement and Corporate Governance in Asia: Guidance and
Good Practices”; Copyright OECD (2014). Corporate governance report on
the Observance of Standards and Codes (ROSC) - assessing the situation of
corporate governance in Vietnam (June 2006). This report provides an
assessment of the corporate governance framework of Vietnam including the
fields of law and regulation, mechanism of inspection and enforcement, market
and especially the stock market. Report on corporate governance in the years
(2011-2012; 2013-2014; 2015-2016). These reports are documents that
reviewing the situation of corporate governance in Vietnam’s largest company,
in which, summarizing the strengths and weaknesses of the legal framework
for corporate governance in each area (shareholder’s rights and basic
ownership functions, equal treatment with shareholders, the role of
stakeholders in corporate governance, information disclosure and transparency,
responsibilities of the BOM).
“CEO & BOM - Handbook of modern corporate governance and
management” by Nguyen Tri Hung, Nguyen Trung Thang - Ho Chi Minh City
Publishing House, 2009. “Company - Capital, management and disputes under
the 2005 Law on Enterprises” by Nguyen Ngoc Bich, Nguyen Dinh Cung,
Knowledge Publishing House, 2009. In this book, the author studies the power
structure in joint stock companies and shareholders and General Meeting of
Shareholders, BOM, Director/Director General, Board of Controllers, selfinterested transactions, and the control of company operations. In order to
clarify the content of the study, in addition to assess and review the actual

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provisions of Vietnamese law on corporate governance, these authors have
compared to good practices, legal provisions on corporate governance of
several countries in the world. from perspective of comparison, the book
“Corporate governance in East Asia after the 1997 crisis” by Truong Thi Nam
Thang, National Economics University Publishing House, 2010. This book
analyzed the regulatory frameworks for corporate governance of the listed and
public companies in four East Asian countries, including Indonesia, South
Korea, Malaysia and Thailand after the 1997 crisis, in which, referring legal
reform of corporate governance in these countries.
In short, above research works have generally assessed the legal framework
of corporate governance in several countries around the world and Vietnam,
although these works have not intensively mentioned public company
governance, from different perspectives, these research results are the basis for
comparing, analyzing, evaluating and learning foreign legislative experience on
corporate governance so that the dissertation makes the theoretical basis, as
well as assessing the practice and experience to improve the law on the
governance of public companies in Vietnam.
1.1.3. research works propose solutions to improve the law on corporate
governance
“Report on the Observance of Standards and Codes (ROSC): Corporate
governance country assessment - Vietnam” by Worl Bank in 2013. Report the
scorecard on corporate governance over the years (2011-2012; 2013-2014;
2015-2016), copyrighted by IFC; most recently Report on corporate
governance for the listed companies in Vietnam in 2018 by HCMC and Hanoi
Stock Exchange. Based on the analysis and evaluation of the legal framework
on corporate governance in Vietnam, the Report makes a number of
recommendations such as: Establishing better cooperation among management

agencies and strengthening authority, human resources and independence of
the Securities Commission; Improving the protection of minority shareholders,
controlling transactions of relevant parties, changing the operational
mechanism of the General Meeting of Shareholders; Establishing
professionalism and operational efficiency of the BOM; Increasing
transparency with the participation of independent auditors; publicity of
ownership structure and management activities.

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“Scientific basis for perfecting the governance of joint stock companies
promote economic development in Vietnam” by Nguyen Dinh Cung, doctoral
dissertation. This study has examined corporate governance model based the
company model that separating ownership from management rights, it then has
introduced the content and operating mechanism of corporate governance
compared to some relevant good practices, and has proposed solutions and
recommendations to further improve the effectiveness of corporate governance
in Vietnam. “Public corporate governance, listing for businesses and
investors” by Le Minh Toan, National Political Publishing House, 2010. This
book has referred generally the listed corporate governance in Vietnam based
on the provisions of the existing law, as well as the current situation of the
implementation of the provisions on corporate governance in Vietnam; factors
affecting the compliance with the rules of the listed and public company
governance in Vietnam. Thenceforth, the author has proposed some
recommendations for improving the law and solutions to enhance the
efficiency of public company governance.
In sum, the research results on corporate governance at home and abroad
are quite diverse and plentiful. Although such recommendations and solutions
are general or the solutions related to a content of the law on public corporate

governance, those research results may be considered a basis for the author can
refer, compare, analyze and evaluate to build a theoretical and practical basis to
assess the practice and experiences to improve the law on the governance of
public companies in Vietnam nowadays.
1.1.4. General assessment
1.1.4.1. Assessing the achieved research results
First, previous research works (especially foreign research works) have
mentioned and analyzed some theoretical bases on corporate governance. The
research works have also provided a comprehensive view of corporate
governance such as the position, role of good corporate governance in the
economies; the concept and elements of corporate governance, good corporate
governance practices; contents of the law on corporate governance, experience
and the implementation of the legal framework on public governance.
Second, the research works have approached and analyzed the contents of
public corporate governance on the basis of legal regulations. These analyses
and studies continue to be evaluated and commented by the dissertation and
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make its own comments about the legal provisions on public corporate
governance in Vietnam.
Third, some research works had a specific orientation to perfect the current
legal framework for corporate governance in Vietnam, but they stop by
generally reviewing or studying corporate governance from economic
perspective, they have not really considered the issue of legal framework for
public corporate governance and the gap between the provisions of the law and
the law enforcement in practice.
1.1.4.2. Pending questions or need to further examine in the dissertation
- The research task is that on the basis of scientific analysis of previous
conceptions of corporate governance to introduce its conception of public

company governance in Vietnam nowadays.
- The specific contents of the legal structure of public corporate governance
(in the world and Vietnam) need to be compared, analyzed and interpreted to
clarify the differences and characteristics of this issue in Vietnam.
- It is necessary to clarify the law contents on public company governance
and determine the relationship of the groups stipulated in the corporate
governance regulations.
- Actual situation of applying the provisions of the law on public company
governance in Vietnam.
- Analyzing and clarifying mechanism of the law enforcement on public
company governance stemming from the unique characteristics of the history
and economic development process in Vietnam.
- Proposing recommendations and solutions to improve the law and
mechanism of law enforcement on the governance of public companies in
practice in accordance with the current situation of Vietnam so that compliance
with international standards and norms on public corporate governance.
1.2. Theoretical basis, research questions and hypotheses
1.2.1. Theoretical basis
When examining public corporate governance, the study utilizes some
typical theoretical bases as follows:
- Agency theory
- Stewardship theory
- Stakeholder theory

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In addition, the study also utilizes theory of market economy; theory of
legal entities, natural persons, theory of risks and risk control; theory of
contract.

1.2.2. Research questions and hypotheses
Q1: What is public corporate governance? Why do we need to adjust by
law on the relationship of corporate governance? What are the legal structure
of public corporate governance?
H1: There should be a unified understanding of public corporate
governance. Thenceforth, referring interpretation needs to be adjusted by law
for this relationship with the characteristics of public company governance.
Q2: Which corporate governance principles and good corporate governance
practices are used as a reference for public corporate governance in Vietnam?
H2: The OECD Code of Conduct is now widely applied, helping OECD
member and non-member countries could assess and improve the legal,
organizational and managerial framework for corporate governance in such
countries and provide guidelines and recommendations for the stock market,
investors, companies and relevant stakeholders in the process of developing
good corporate governance.
Q3: What is the content of the provisions of the existing law on public
company governance in Vietnam? How does apply them in practice?
H3: Basically, the provisions of the existing law on public company
governance in Vietnam have partly met the requirements of reality, and
assessed to good practices of corporate governance in the world. Actually,
however, the application of these provisions is not effect, there are many
limitations and inadequacies in the application process, even some contents
have not been adjusted by the law.
Q4: with the limitations and inadequacies mentioned above, what are the
directions and solutions to improve and overcome?
H4: In order to complete the provisions of the law on public corporate
governance in Vietnam, it is necessary to properly assess the real situation of
applying these provisions in practice, and on the basis of studying experience
of improving the law on corporate governance in the world, including distinct
characteristics originating from Vietnam’s history and economic development

process.
Conclusion of chapter 1
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By reviewing literature, the dissertation makes comments and assessment:
it argues that domestic and foreign research works are valuable material source
not only theoretical aspects but also high practical values in order for the
dissertation continues to improve the legal framework on the governance of
public companies in Vietnam. At the same time, the author also identifies the
issues need to be solved and further examined in this dissertation.
Chapter 2
THE THEORETICAL ISSUES AND THE LAW ON PUBLIC
COMPANY GOVERNANCE
2.1. The theoretical issues on public company governance
2.1.1. Concept of corporate governance
First, in a broad sense, corporate governance is a system of rules and
mechanisms to organize effectively company for the benefit of the company
and society. Accordingly, “corporate governance” is defined as the rights and
responsibilities of managers, supervisors as well as mechanism to ensure
implementation. Specifically, clearly defining the content of division of rights,
obligations and responsibilities among the company owner, General Meeting of
Shareholders, Director, Board of control and relevant persons of the company,
and setting up rules and procedures to make decisions about company affairs.
The institutions governing this relationship are concretized in the Corporate
Law, the Commercial Law, the Law on Securities, the Law on Corporate
Governance, the Bankruptcy Law, and other relevant laws.
Second, in a narrow sense, corporate governance is understood as the
internal corporate governance institutions. The corporate governance regulates
the relationship among owners each other; between them and the executive

management apparatus of the company, thereby preventing the abuse of power,
minimizing unnecessary risks to the company and its owner, and the
institutions are primarily in the laws of business organization (the Corporate
Law, or the Law on Enterprises). For public company governance, these
contents are also stipulated by the Law on Securities, listing regulations,
international corporate governance practices and internal regulations. This is
also the approach and the basis for the dissertation.
2.1.2. The governance of public companies
Public corporate governance is inseparable from the concept of corporate
governance in general, which is a set of mechanisms related to corporate
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governance and control. It sets out a way to divide rights and obligations
among members of a company, including shareholders, the BOM, the Board of
Directors and relevant stakeholders. However, with its “public” nature
(economic organization, centralized management mechanism, separation
between ownership and manager, the participation of a large number of
shareholders, with a large scale of capital and ability to access to various
sources) the way of managing public companies needs to comply more strictly
and meet the requirements of the law on corporate governance compared to
other types of companies. Such requirements are often defined by the law on
enterprises, the law on securities or listed rules on the stock market and other
relevant legal documents depending on the legislative and business
environment of each country. In addition to high compliance with provisions of
the law on corporate governance, public companies themselves must build and
follow rules of good corporate governance practices to create confidence for
investors and increase the attractiveness in attracting capital.
2.1.3. Principles of public company governance
- Ensuring the basis for an effective corporate governance framework

- Shareholders’ rights
- Equal treatment for shareholders
- Information disclosure and transparency
- Responsibilities of the BOM
- The role of stakeholders in the governance of public companies
2.1.4. Model of public company governance
2.1.4.1 Internal governance model of the public companies
* Based on ownership structure
- The centralized-ownership structure is a system of corporate governance
of those inside.
- The decentralized-ownership structure is a system of corporate
governance of those outside.
* Based on internal governance structure
- Unitary board or one-tier board model
- Dual board or two-tier board model
- Mixed models
2.1.4.2 Corporate governance model of some countries in the world

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Research works in the world have mentioned corporate governance model
that is the UK-US model developed to be based on the representative theory
and the governance model based on the decentralized ownership; German
model, this is a typical one for the continental Europe, developed based on
stakeholder theory, centralized ownership-based governance system; Japanese
model based on theory of manager and centralized ownership-based
governance system.
2.1.4.3 Suggestions for Vietnam
Currently, the corporate governance models of each region have certain

strengths and weaknesses, but applying any model for Vietnam is inappropriate
because of differences of culture, society, business practices, economic
development level and legal institutions of each country. Vietnam could apply
this model but there should be adjustment in accordance with situation of
Vietnam. In addition, Vietnam should refer to the OECD’s Corporate
Governance Code of Conduct to build a legal framework on public corporate
governance that is appropriate to its conditions.
2.2 Theoretical issues of the law on the governance of public companies
2.2.1. It is necessary to adjust the relationship of the governance of public
companies by law
The law on corporate governance protects the rights of shareholders,
prevents the abuse of power of managers, business executives and majority
shareholders themselves.
The law on corporate governance ensures and realizes the ownership rights
and business freedom stipulated by the law.
The law on corporate governance aims to create a corporate governance
environment corresponding to social values.
The law on corporate governance recognizes, protects and facilitates
exercising the rights of investors.
The law on corporate governance is also a safe legal corridor for the
activities of investors
The law on corporate governance ensures the harmonization of interests of
stakeholders.
2.2.2 Legal regime for public company governance
If we understand the concept of “corporate governance” in a narrow sense,
the law on public company governance is a system of legal provisions
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governing the relationship of internal management organization of the public

company that just stipulated by the Corporate Law (the Law on Enterprises),
the Law on Securities, regulations on listing and relevant documents. In a
broad sense, the law on public company governance is a system of provisions
of the law governing social relations arising from the management and control
of the company to achieve certain goals. In addition, if we approach from
perspective of accountability, besides the provisions of the law, the system of
self-regulation or in other words “good practice rules” is also content to be
reviewed.
The content of the law on public company governance includes: The role of
BOM, General meeting of shareholders; Powers, responsibilities, obligations of
managers; Shareholder rights, protecting shareholder rights; monitoring
mechanisms for executive and managerial activities; Transparency, information
disclosure; mechanism of power distribution in public companies.
- General law on corporate governance
- Specialized law on public company governance
- Internal documents of public companies
2.2.3 Structure of the law on corporate governance
2.2.3.1 Regulations on shareholders’ rights and protection of shareholders’
rights
2.2.3.1 Regulations on management system and power division in public
companies
2.2.3.3 Regulations on the prevention of interest conflicts and monitoring
potentially self-interested transactions and relevant interests
2.2.3.3 Regulations on transparency and information disclosure
2.2.3.4 Regulations on inspection, supervision and handling of violations of
public company governance activities
Conclusion of chapter 2
- The concept of public company governance is inseparable from the
concept of general corporate governance, which is a set of mechanisms related
to corporate governance and control. It sets out a way to divide rights and

obligations among members of a company, including shareholders, the BOM,
the Board of Directors, and relevant stakeholders. However, with its “public”
feature, the way of managing a public company needs to comply with and meet

15


more and higher requirements of the law on corporate governance than other
types of companies.
- The law on public company governance includes: Regulations on
Shareholders’ rights and protection of shareholders’ rights; Regulations on the
management system and power division in public companies; Regulations on
transparency and information disclosure; Regulations on the prevention of
interest conflicts and monitoring of potentially self-interested transactions and
relevant interests; Regulations on the inspection, supervision and handling of
violations of public company governance activities.
Chapter 3
THE REALITY OF THE LAW ON PUBLIC COMPANY
GOVERNANCE IN VIETNAM
3.1. The reality of regulations of the law on public company
governance
3.1.1. Regulations of the law on shareholder rights and protection of
shareholder rights
Regulations on shareholder rights stipulated in the 2014 Law on Enterprises
are quite adequate and in line with international practices. While implementing,
however, there are still some problems:
- The right to attend the meeting and vote at the General meeting of
shareholders.
- The right to nominate people to the board of management
- Mechanism and mode of exercising the right to transfer shares and

nominate people to the BOM and the Supervisory Board.
- The right to request cancellation of resolutions of the General Meeting of
Shareholders and the BOM
- The right to sue of shareholders
- The right related to stock or share transfer
3.1.2. The provisions of the law on the management apparatus and
division of power in public companies
3.1.2.1 General Meeting of Shareholders
3.1.2.2 BOM and members of BOM
3.1.2.3 Director/Director General
3.1.2.4 Supervisory Board and its members
3.1.2.5 Secretary of the company
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The internal governance structure of the public company is stipulated in the
2014 Law on Enterprises, which continues to inherit the provisions of the 2005
Law on Enterprises but there are amendments and supplements of new
regulations that are more appropriate with international practices and new
situation to replace the old regulations. While implementing, however, there
are some problems in the provisions of the law. Namely, regulations on
meetings, approval of decisions of the General Meeting of Shareholders;
Regulations on the structure and authority of the BOM; elect and dismiss
members of the BOM; Regulations on structure, authority of the Supervisory
Board, elect and dismiss members of the Supervisory Board.
3.1.3 The provisions of the law on prevention of interest conflicts and
monitoring potentially self-interested transactions and relevant interests
The law has the detailed and specific provisions for shareholders of the
company and the regime and modes of controlling the company’s transactions
with shareholders in accordance with the corporate governance principles of

the OECD. However, there are still some inadequacies in the provisions of the
law on prevention of interest conflicts and monitoring potentially selfinterested transactions and relevant interests as follows:
- Information disclosure of major shareholders
- The content of “related person” is not complete
3.1.4. The provisions of the law on transparency and information
disclosure
Some inadequacies related to the regulations on public company’s
information disclosure
- Form and language of information disclosure
- Time for information disclosure
- The target group must disclose information is incomplete
- Some regulations on information disclosure of public companies are
unclear, it is difficult to determine the time of information disclosure
3.1.5 Inspection, supervision and handling violations of public company
governance
Supervision activities of public companies are built by the two-level
supervision model: (1) The first level: Supervision through intermediary
organizations such as: Stock Exchange, Stock Exchange Center, Securities
Depository Center. (2) Second level: State Securities Commission.
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Securities market inspection activities are conducted on the basis of the
provisions of the law in documents such the 2010 Law on Inspection and the
Law on Securities. The executing agency is the Securities Inspection.
Handling violations: Public companies, the relevant organizations and
individuals who violate or do not comply with the provisions of the law on
corporate governance, depending on nature and seriousness of their violations,
they will be administratively sanctioned or examined for penal liability under
the provisions of the law.

3.1.6 Evaluating provisions of Vietnamese law on public company
governance
3.1.6.1 Advantages
First, Vietnam has built up a relatively complete system of legal documents
to serve as a basis for enforcing public company governance.
Second, the content of regulations on public company governance is issued
and built based on practical legal conditions, the situation of enterprises and
referring international experiences.
Third, enhancing the openness and transparency of organizations and
individuals participating in the stock market, protecting interests of investors.
3.6.1.2 Limitations
First, some provisions of the law on public company governance are
overlapping and not uniform.
Second, some provisions of the Law on Enterprises are not really consistent
with reality and international practices.
Third, limitations of the provisions of the law on securities when applying
for public companies.
3.2. The reality of law enforcement on public company governance
3.2.1 Overview of the reality of law enforcement on public company
governance in Vietnam
Based on the results of assessing the situation of corporate governance of
public companies over the years in the corporate governance scorecard Report,
it can be seen that Vietnam has continuously made efforts in creating a legal
framework for corporate governance, the efforts of public companies to
improve the implementation of legal regulations on corporate governance.
However, it can be seen that Vietnamese businesses are unfamiliar with
progressive governance practices. In addition to efforts to promote compliance
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and meet basic governance requirements, the dissemination and support to
implement such practices are necessary.
3.2.2. The reality of law enforcement on public company governancet in
each field
- On the rights of shareholders
- The issue of treatment among shareholders
- Responsibilities of the BOM
- On information disclosure and transparency
- On controlling company’s transactions with relevant parties.
3.2.3. Assessing the reality of law enforcement on public company
governance
3.3.2.1 Advantages
- Most of public companies have been aware of responsibilities and the
need of corporate governance and have made certain efforts in set up internal
documents to make regulations on internal governance.
- The application of principles and regulations on corporate governance has
significantly improved the operations of public companies by increasing
openness and transparence, the rights and interests of shareholders are well
protected, the functions, duties, powers and responsibilities of administration
agencies and executive board in the company are more clearly defined.
- Regarding supervision and enforcement: The State Securities
Commission, the State Bank and the Ministry of Finance all have a relatively
clear jurisdiction.
- Enhancing the publicity and transparency of organizations and individuals
participating in market activities, especially public companies.
3.3.2.2 Limitations
- Actually, the law enforcement on corporate governance of public
companies is largely arbitrary, not really protecting the legitimate rights and
interests of shareholders.
- Activities of the BOM are not really effective.

- Activities of the Supervisory Board are formal
- Transparency and information disclosure have not been fully implemented
and there are many violations in this area.
- Actually, shareholders’ rights have not been guaranteed yet

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- The way to control the company’s transactions with relevant parties is still
very limited.
- The authority of the State Securities Commission in inspecting, examining
and verifying violations of securities activities and the securities market is
incomplete, and the authority of the State Securities Commission is not
associated with regulations on the authority of relevant agencies, this leads to
unsuccessful implementation of functions of managing, supervising and
enforcing securities and stock market.
Conclusion of chapter 3
Vietnam has had a relatively comprehensive system of legal documents as a
basis for the implementation of corporate governance of public companies. The
2014 Law on Enterprises is a law of establishing legal framework that contains
basic regulations on corporate governance for types of businesses of Vietnam.
Meanwhile, the Law on Securities provides basic principles of corporate
governance, thereby, management agencies issue detailed documents and
guidelines on governance so as to apply for public companies. Regulations on
public company governance in our country have been increasingly closing to
good practices of corporate governance in the world.
However, the provisions of the law on public corporate governance still has
many inadequacies related to the governance structure and model; functions,
duties and authority of the General Meeting of Shareholders, the BOM and the
Supervisory Board; mechanisms to protect rights and interests of shareholders;

mechanism to control and prevent interest conflicts; issues of transparency and
information disclosure in corporate governance. Some provisions of the
guiding documents are not consistent with other legal documents. This has
caused confusion of authorities and public companies themselves.
Chapter 4
DIRECTIONS AND SOLUTIONS TO IMPROVE THE LAW ON
PUBLIC COMPANY GOVERNANCE IN VIETNAM
4.1. Directions to improve the law on public company governance
4.1.1. The need to improve the law on public company governance
Over the years, the legal framework for corporate governance in Vietnam
has been relatively fully developed, in accordance with common principles and
practices. Actually, however, specific governance framework of public
companies is largely arbitrary, not really protecting the lawful rights and
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interests of shareholders. Namely: (1) Ensuring the rights of shareholders in
general and minority shareholders in particular is still ineffective; (2) There has
not been a strict compliance with the publicization; (3) Not controlling the
company’s transactions with relevant parties; (4) Internal control is formal and
ineffective; (4) The role and position of the BOM are not appreciated. Due to
this reason, it is necessary to further improve the provisions of the law on
public companies.
4.1.2. Viewpoints of improving the law on public company governance
- Improving the content of institutions on public company governance must
be based on the characteristics of Vietnam’s market economy.
- The law on public company governance must be consistent with the
characteristics of Vietnamese business culture.
- Ensuring the consistency of the law on public company governance.
- The law on public company governance must meet the requirements of

international economic integration.
4.2. Solutions to improve the provisions of the law on public company
governance
4.2.1 Solutions of ensuring the uniformity of the provisions of the law on
public company governance
4.2.2 Solutions to improve the provisions of the law on shareholders’
rights and protection of shareholders’ rights
4.2.3 Solutions to improve the provisions of the law on the management
apparatus and division of power in public companies
4.2.3.1. Improving regulations on the General Meeting of Shareholders
4.2.3.2. Improving regulations on the BOM
4.2.3.4. Improving regulations on the Supervisory Board
4.2.4 Solutions to improve the provisions of the law on transparency and
information disclosure
4.2.5 Solutions to improve the provisions of the law on prevention of
interest conflicts and monitoring potentially self-interested transactions and
relevant interests
4.2.6 Solutions to improve the provisions of the law on inspection,
supervision and handling violations of public company governance activities
4.3 Solutions to support and improve the efficiency of law enforcement
on public company governance
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4.3.1. For state management agencies
4.3.2. For Stock Exchanges
4.3.3. For organizations related to corporate governance
4.3.4. For public companies
Conclusion of chapter 4
Enhancing corporate governance means contributing to the stable and

sustainable development to improve company’s operation and accessibility to
external capital. In contrast, a weak framework of corporate governance will
reduce investors’ trust and not receive external capitals, reduce the company’s
economic values and may lead to bankruptcy or merger of corporation which
increase the risks to the national economic system. Thus, improving and
strengthening a system of law on public company governance play an
extremely important role. Corporate governance well will minimize the
vulnerability of the economy before financial crisis, serving public policy
planning of the Party and the State as well as solutions to improve the legal
framework for corporate governance; Strengthening the role and capacity of
management agencies and support public companies; Enhancing the position of
the BOM in accordance with the legal status and its practical significance in
corporate governance; Strengthening and improving the system of inspection,
control and the independence, professionalism and effectiveness of the
Supervisory Board; Improving transparency and publicization; Ensuring equal
treatment and the rights of shareholders, this probably contributes to improving
the quality and efficiency of corporate governance in our country.

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CONCLUSIONS
After examining the law on the governance of public companies in
Vietnam, the study draws the following conclusions:
1. Corporate governance in general and public company governance in
particular, are a key element to promote the efficiency of market, economic
development and investors’ trust. Corporate governance involves a set of
relationships among the Board of Directors, the BOM, shareholders and other
relevant stakeholders. Corporate governance also establishes the structure so as
to build the company’s goals, determine means to achieve such goals, and

monitoring the implementation of these goals. The legal institutions on the
governance of public companies have a very important position in regulating
economic relations, it is considered a tool to support and protect the interests of
investors and society; provide tools of managing platform to improve the
company’s performance and creating leverage to stimulate the use of resources
effectively for development goals. In a narrow sense, the law on corporate
governance helps to solve the internal conflicts of company itself that is
interest conflicts between the company owner and manager, between
shareholders with large capitals and others with little capital, between owner
and other relevant persons.
2. The legal regime on the governance of public companies is an important
issue and great economic and social significance. To implement effectively
regulations in this area contributes to improving public corporate governance,
this means contributing to the stable and sustainable development so as to
improve the company’s performance and accessibility to external capitals. In
contrast, a weak framework of corporate governance will reduce investors’
trust and not receive external capitals, reduce the company’s economic values
and may lead to bankruptcy or merger of corporation which increase the risks
to the national economic system. Therefore, building a safe legal corridor for
corporate governance is a necessary and urgent requirement.
3. Currently, the legal regulations on public company governance in our
country have been gradually improved and closer to good practices of
corporate governance in the world, especially when comparing with OECD’s
principles of corporate governance on the rights of shareholders, equality
among shareholders, transparence and information disclose and controlling
transactions at risk of conflicts of interest, and the role of stakeholders.
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