REPORT ON INDEPENDENT DIRECTORS SURVEY IN PUBLIC COMPANIES IN VIETNAM

According to international practices on modern corporate governance, transparency is considered the top criterion to ensure the effectiveness and sustainability of corporate governance activities and protect the stakeholders' legitimate interests. One cornerstone to enhance corporate governance transparency is the improvement of both the role and performance of independent directors on the company's board. In Vietnam, principles of international corporate governance codes have been increasingly adopted into local law, especially those related to independent directors. The legal framework on independent directors has been significantly updated with more detailed regulations governing board independence, transparency, and equity in corporate governance. However, the implementation of these regulations, especially in public companies, has not been carefully considered. The appointment of independent directors is often merely for compliance purposes rather than aiming at the actual value that independent directors could bring to the company. In addition, some recent reports1 have even revealed that the presence of independent directors has a negative effect on business performance. Such practice possibly results from both subjective and objective reasons, which could be, among others, a lack of clarity in the current regulations, the capacity of independent directors, and the dominance of controlling shareholders in the company.

As a social-professional association of independent directors in Vietnam, Vietnam Independent Directors Association (VNIDA), in collaboration with our strategic partner, FiinGroup Vietnam, has conducted a survey to examine the current status and role of independent directors in public companies in Vietnam, and identify challenges as well as existing problems faced by independent directors and companies. This report has been prepared as a result of the survey and research of the project’s working team, with findings and recommendations that serve as a basis for stakeholders, including the legislative body, regulators, practitioners, investors/shareholders, the corporate sector, and other stakeholders, to improve the role and functioning of independent directors for better corporate governance in Vietnam.

This report will help to improve the role and performance of independent directors in Vietnam, develop and promote independent directors as a career, and enhance governance standards and practices in the country.

Link for reading: REPORT ON INDEPENDENT DIRECTORS SURVEY IN PUBLIC COMPANIES IN VIETNAM

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