The Government has just issued Decree No. 71/2017/ND-CP guiding corporate governance applicable to public companies on June 6, 2017 and will officially take effect from August 1, 2017. . This Decree contains many new regulations in the way of management and administration of public companies.
Administrative Council:
Membership:
A new regulation that public companies should note is that the Chairman of the Board of Directors cannot concurrently hold the position of Director (General Director) of the same public company. This regulation will take effect from August 1, 2020.
In addition, a member of the board of directors of one public company cannot concurrently be a member of the board of directors in more than five other companies. This regulation will take effect from August 1, 2019.
Membership structure:
The structure of the Board of Directors of a public company should ensure a balance between executive and non-executive members. At least 1/3 of the members of the Board of Directors are non-executive members.
Non-executive member means a member of the Board of Directors who is not the Director, General Director, Deputy Director, Deputy General Director, Chief Accountant and other executives as prescribed in the Charter of the company.
Board of Directors meeting:
The Board of Directors must meet at least once a quarter.
Surveyor:
A controller of a public company must not be a person:
Working in the accounting and finance department of the company;
Being a member or employee of an independent auditing company that audited the company’s financial statements for the previous 3 years.
For listed companies and public companies in which more than 50% of charter capital is held by the State, the Controller must be an auditor or an accountant.
Information Disclosure:
A public company is obliged to fully, accurately and promptly disclose periodical and extraordinary information on the situation of production, business activities, finance and corporate governance to shareholders and the public. A public company must fully, accurately and promptly disclose other information if such information is likely to affect the price of securities and affect the decisions of shareholders and investors. Information and the manner of information disclosure shall comply with the provisions of law and the company’s charter.
Announced contents:
Regarding the model of organization and management of the company: Public companies must report to the State Securities Commission and the Stock Exchange and disclose information on the organizational and management model of the company;
About corporate governance: Public companies must disclose information about corporate governance at the Annual General Meeting of Shareholders and in the Company’s Annual Report in accordance with the securities law.
Regarding the income of the Director (General Director): The salary of the Director (General Director) and other managers must be shown in a separate section in the annual financial statements of the company and must be reported to the General Meeting shareholders at the annual meeting.
About members of the Board of Directors, Supervisors, Director (General Director): Members of the Board of Directors, Supervisors, Director (General Director) are responsible for reporting to the Board of Directors, Board of Supervisors Controlling transactions between the company and the company in which these people are founding members or members of the Board of Directors, the Director (General Director) during the last 3 years before the time of the transaction or with a company whose related persons are members of the Board of Directors, Director (General Director) or major shareholders.
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