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CORPORATE GOVERNANCE
What is CG?
Corporate governance deals with the ways in which suppliers
of finance to corporations assure themselves of getting a
return on their investment, The Journal of Finance, Shleifer
and Vishny [1997, page 737]
Modern Firm
GOVERNANCEL
EVEL
AGM
BOD
SB
MANAGEMENT
LEVEL
Management
F1
F2
F2
F2
Why CG?
Separation of ownership & control: problem exists whenever
owners themselves do not engage in the direct management
of the firm.
Self-interest before enterprise interest: when some owners
or managers view their self-interest before the interest of the
enterprise, all shareholders and stakeholders.
Effective CG System
Good corporate
performance
Full accountability to
shareholders/stakeholders
MB
BOD (SB)
Corporate
Charter
Shareholder
Meeting
MODEL CHARTER
Board of
Directors
CEO
structure
Corporate
Charter
Shareholder
Meeting
Board of
Directors
CEO
Company
Secretary
Incentive
Schemes
2 FUNDAMENTAL ROLES
1. To provide leadership
2. To perform oversight over management
1. Establish overall strategies & directions
2. Develop guidelines & protective system
3. Oversee & support CEO & senior mgmt, review
recommendations & proposals
BOARD COMPOSITION
1. Executive non executive members
2. Independent members
3. Qualifications required (technical, strong character,
independent mind, practical wisdom, sound judgment)
FUNDAMENTAL OBLGATIONS
1. Full comprehension & compliance with fiduciary duties
2. Avoidance & full disclosure of conflicts of interests
3. Respect & implementation of internal policies &
established procedures
Corporate
Charter
Shareholder
Meeting
ROLE
1. To assist the Board of Directors and other organs
of enterprise
2. To facilitate the work of both the Chairman and
members of the Board and ensures full
compliance with the Charter and regulations
Board of
Directors
MAIN TASKS
1.
2.
3.
4.
CEO
Company
Secretary
Incentive
Schemes
Corporate
Charter
Shareholder
Meeting
Board of
Directors
CEO
ROLE
Appointed & Supervised by BOD
1. Accountable for the day-to-day operation and
management of the enterprise before the Board and in
compliance with the Vietnamese Law
2. Must submit for approval of the Board all matters as
detailed in the Charter
1.
2.
3.
4.
5.
Company
Secretary
Incentive
Schemes
6.
7.
SELECTION
Integrity / Competence / Character/ Industry Knowledge/
Management Philosophy
Corporate
Charter
Shareholder
Meeting
Board of
Directors
1.
2.
3.
4.
CEO
Company
Secretary
Incentive
Schemes
1.
2.
3.
4.
RIGHTS OF SHAREHOLDERS
Attend and vote on all matters under the jurisdiction of
the GAS, each ordinary share carries one vote
Receive dividends
Prioritized for subscribing for new shares in proportion to
number of shares each hold
Receive a part of remaining assets in proportion to
number of shares each hold after payments for liabilities
and shareholders of other types upon dissolution of the
Company
DUTIES OF SHAREHOLDERS
Pay for the subscribed shares
Be liable for liabilities of the Company within their
contribution
Abide by the Charter and internal management rule
Observe decisions of the Annual Shareholders Meeting
and the BOD
Corporate
Charter
Shareholder
Meeting
Board of
Directors
CEO
Company
Secretary
Incentive
Schemes
Fiduciary Duties
Duty of Care
1. In good faith
Duty of Loyalty
Avoidance of Conflict of
Interest
1. Members
of
the BOD
2. Members
of
the Supervisory
Board
3. CEO
4. Other Senior
Management
Personnel
Fiduciary Duties
Duty of Care
Duty of Loyalty
Avoidance of Conflict of
Interest
1. Members
of
the BOD
2. Members
of
the Supervisory
Board
3. CEO
4. Other Senior
Management
Personnel
Fiduciary Duties
Duty of Care
Duty of Loyalty
Avoidance of Conflict of
Interest
1. Members
of
the BOD
2. Members
of
the Supervisory
Board
3. CEO
4. Other Senior
Management
Personnel
Corporate
Charter
Shareholder
Meeting
Board of
Directors
1. Performance Units
2. Bonuses
3. Perks
4. Share Options
CEO
Company
Secretary
Incentive
Schemes
Premium Options
Discounted Options
Indexed Options
Performance Vesting
Options