Corporate governancebenmarking analysis of vietnam electricity group in the integration period

Nội dung text: Corporate governancebenmarking analysis of vietnam electricity group in the integration period

1. CORPORATE GOVERNANCEBENMARKING ANALYSIS OF VIETNAM ELECTRICITY GROUP IN THE INTEGRATION PERIOD Do Thi Binh Vietnam University of Commerce Abstract The international economic integration process has opened significant opportunities of attracting foreign investment for Vietnam power sector, which is now in the time of equitization. However, there are growing concerns regarding Vietnam Electricity’s performance that reduce the investors’ attention. To improve EVN group performance and public relationship, there are several measures and engagements that EVN should take in a careful restructuring plan. Among them, improving corporate governance practice is a critical task. This researchuses ASEAN Corporate Governance Scorecardto evaluate EVN group’s current corporate governance practice and find solutions for closing corporate governance gaps among EVN and other listed companies in Thailand and Vietnam. Keywords:corporate governance,Vietnam Electricity’s, integration period 1. INTRODUCTION Market opening and international economic integration has put Vietnam’s economy right at the door of opportunities and challenges. This door takes Viet Nam’s enterprises to the opportunities of not only doing business with attractive markets such as the USA, the EU, China, Korea, Japan, etc but also attracting foreign investment.However, the process of economic integration, particularly since Vietnam joined the WTO and greater participation of free trade agreements (FTAs), also revealed more clearly the immanent weaknesses of the Vietnam’s enterprises. Decision 929, the most important legal document on State Owned Enterprises (SOE) restructuring released by the Vietnam Government in 2012, says that SOE equitization is the central task for the period from 2012 to 2015 (ADB, 2014). Vietnam has run a series of investment promotion campaigns both in Vietnam and overseas in an effort to accelerate the SOE sales. Inviting foreign investors to buy an SOE stake is a solution. Manyeconomic analysts commented that seeking buyers from foreign investors is a necessity. However, to date many foreign investors have been hesitant to invest in SOEs. A question has been raised about whether foreign investors are interested in buying stakes in SOEs like Vietnam Electricity group (EVN). Corporate governance (CG) is defined by the OECD as a set of relationships between a company’s management, its board, its shareholders and other stakeholders. CG also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined (OECD, 2004). Good CG is a culture of Consistency, Responsibility, Accountability, Fairness, and Transparency that is deployed throughout the organization (OECD, 2004). It is widely believed that good corporate governance 519
2. practice is beneficial for a company and its stakeholders as well for the economy as a whole. Vietnam Electricity (EVN) group is the second biggest state-owned corporation in Vietnam. It plays a vital role in the national electric power sector, which is mainly under governmental control. Throughout the years, EVN group has evolved rapidly in size and involved in the whole electricity power supply chain across the country (Figure 1). Figure 1.EVN group structure Source: Own collaboration. Note: EPTC = Electricity Power Trading Company; NLDC = National Load Dispatching Center; HPP = Hydro Power Plant; GENCO = Power Generation Company; NPT = National Power Transmission Company; NPC, CPC, SPC, HNPC and HCMPC = Northern, Central, Southern, Hanoi and Ho Chi Minh city Power Companies. The figure shows that EVN headquarters controls all three segments of the power supply chain through its possession of: 66% of the national power generation capacity (EVN corporate and the three GENCOs); 100% of the national transmission system (NPT); and 100% of the distribution systems (five PCs). It means that EVN corporate is the single buyer in the power generation market (via EPTC); and acts as both the system operator and the market operator (via NLDC). The group was somehow successful in managing its operations and development programs to meet with very high growing electricity demand of more than 10% per year. This significantly contributed to transforming Vietnam from a low to middle income economy and towards the integration period. In the fiscal year 2015, EVN sold 172.3TWh of electricity to customers nation-wide, an increase of 10.8% as compared to that in 2014 (EVN, 2015). However, because of its centralized governance arrangements, which leaves almost all management and control responsibility with EVN headquarters and the various subsidiaries are in effect branches of EVN headquarters with very limited autonomy, EVN group performance has been very poor for many years. EVN suffered sustained losses from 2008 to 2011 and these contributed to a serious deterioration in EVN’s financial condition. It reported profits during the 2012-2015 period but the performance was quite poor if measured by common financial indicators such as ROE and ROA. Furthermore, EVN has had low customer satisfaction index and very poor public relationship for quite a long time. This is dangerous since the odd relationship has moulded bad perception by the public that EVN group is non-transparent to 520
3. cover mismanagement activities and practices. To improve EVN group performance and public relationship to attract investment flows from integration’s opportunity, there are several measures and engagements that EVN should take in a careful restructuring plan. Among them, improving CG practice is a critical task. This research, therefore, aims at evaluating EVN group’s current CG practice, assessing its possible effects on the group performance and public image. The research intends to identify the gaps between EVN group’s current CG practice and international benchmarks to highlight the challenges of EVN in attracting foreign investment in its equitization and find solutions for closing corporate governance gaps among EVN and other listed companies in Thailand and Vietnam. It becomes more meaningful in the time of integration that has opened significant opportunities of attracting foreign investment for Vietnam power sector. 2. RESEARCH METHODOLOGY In this research, the OECD Corporate Governance Principles are used as the benchmark for assessment of EVN group CG practice. Currently, there are some methodologies for gauging the application of the OECD Corporate Governance Principles in corporations worldwide. In this research, the ASEAN Corporate Governance Scorecard approach is chosen as the framework for evaluating CG practice in EVN group. The choice is because the ASEAN Corporate Governance Scorecard has been developed based on (a) the OECD Principles of Corporate Governance and (b) incorporating the laws, rules, regulations and requirements of ASEAN member countries, in which Vietnam is a member. This choice also enables comparison between current practices in EVN group and those in publicly listed companies in Vietnam other ASEAN countries. EVN group is a cluster of many legally independent companies. The group is organized in a pyramidal structure as follows: - On top is EVN corporate (or in short EVN), which is the parent company. EVN is a one-member limited liability SOE that the government provides 100% of the charter capital. - There are 9 general corporations (3 GENCOs, NPT, and 5 distribution corporations) which are again structured in the form of parent-subsidiary relationship. The parent companies are EVN corporate’s level 1 subsidiaries. They are incorporated as one-member limited liability companies wholly owned by EVN. Under the level 1 subsidiaries, there are two more levels of subsidiaries and associates. Some of them are limited liability companies, others are joint stock companies. - Some of EVN subsidiaries and associates are publicly listed. These companies operate under sticker mandates for CG practices and are often under constant supervision by many stakeholders and the media. Others are joint stock companies that are not yet listed and generally are outside the radar of government agencies enforcing for implementations of proper CG. Because of this pyramidal structure, to assess CG practice in EVN group, it is necessary to conduct a survey for evaluating CG practice in: - EVN headquarters; 521
4. - Parent companies of 3 GENCOs, NPT, and 5 distribution corporations. - Publicly listed companies and other non-listed joint stock companies. Since there is a large number of joint stock companies in which EVN holds shares and because of time constraint, this research selects to assess only one typical representative of the publicly listed companies and one of the non-listed joint stock companies in which EVN or its wholly-owned subsidiaries hold shares. The assessment of each company is based on externally and internally available data about the company. Data collection for each company includes all available and relevant information about the company, such as annual reports, financial statements, notices of AGM, AGM minutes and documents (for joint stock companies), CG reports, public and regulatory filings, corporate charters, articles of incorporation, internal rules and regulations, internal decisions and resolutions, materials from company website, public media and other sources of information. Essentially, data in 2014 is used for the analysis. Evaluating CG progress in EVN group by comparing the level of practices between different years is not possible because this is the first CG assessment for companies in EVN group. However, comparison with publicly listed companies in Vietnam and in some other ASEAN countries is possible thanks to the Scorecard method employment and will be given in the following section. To make sure the CG concepts at each company are actually applied in practice in the company, not just accepted at the conceptual level (i.e. compliance in form, not in substance), the survey is conducted in the following steps, - First, some external and experienced investors, who are active members of a value investing club, were requested to use publicly available information about the companies to make judgments and to fill in the questionnaires from the ASEAN Corporate Governance Scorecard. - Second, handful inside-group officers, who mostly work at the HR departments in the headquarters and in major subsidiaries and who are reasonably exposed to the CG discipline, were asked to evaluate the CG practice in the companies they work in, using the same questionnaires. It is important that the chosen persons are capable of making relevant judgments based on the actual practices that they observe in the companies from inside, not just doing simple box-ticking. - Third, individual survey results for each selected company were combined to come up with a single best survey result for the company. If there are differences between different individual survey results, discussions with corresponding individuals are made to find out the cause of the different judgments. This helps to gain inside into the issues and to understand the underlying opinions, reasons and in some cases the motivations behind the issues. Thus, final conscientious or best judgments can be made in the combined survey result for each company. This method also ensures the best possible level of accuracy, objectivity, consistency and reliability of the survey results. The ASEAN Corporate Governance Scorecard covers five dimensions of the OECD Principles with the weight allotted to each of the dimensions is as follows (Table 1): 522
5. Table 1. Composition and structure of ASEAN CG Scorecard - Level 1 Weight (% of total Maximum Level 1 No. of items level 1 score) attainable score A. Rights of shareholders 25 10% 10 points B. Equitable treatment of shareholders 17 15% 15 points C. Role of stakeholders 21 10% 10 points D. Disclosure and transparency 40 25% 25 points E. Responsibilities of the board 76 40% 40 points Total 179 100% 100 points Source: ADB (2014) The weighted score of each dimension is calculated using the following formula: Note: (*) is the total number of items of the dimension after adjusting for not-applicable items for a particular company. Source: ADB (2014) For EVN corporate and its one-member limited liability subsidiaries, dimension A (Rights of shareholders) and dimension B (Equitable treatment of shareholders) are not applicable. Thus, only three remaining dimensions are considered in the survey. Within each dimension, there exist some questions that are not applicable (in short “n/a”) for EVN headquarters and its one-member limited liability subsidiaries. These questions are then marked “n/a.” Consequently, the maximum attainable score in that dimension is reduced accordingly when calculating the actual score of that particular dimension. For these companies, the maximum attainable score at Level 1 is, thus, 75 points minus the total number of not applicable questions. For other types of companies, all five areas in the Scorecard are used. 3. RESEARCH FINDINGS 3.1.Overall results In this research survey, 12 legally independent companies in EVN group were assessed. They are EVN corporate, three GENCOs, NPT, five power distribution corporations (parent companies), a typical representative from publicly listed joint stock companies, and a typical representative from non-listed joint stock companies. 03 GENCOs have the same governance arrangement. Hence, their assessments came up with an identical overall score. Likewise, 05 power distribution corporations have the same score measured by the Scorecard (Figure 2). 523
6. 100 80 75.4 60 40 33.9 33.1 20 15.1 10.9 14.4 8.7 13.9 0 Figure 2.Overall score by company Source: Own collaboration. Note: The legend “Thailand” represents Thai listed companies. Their average score used in this figure is published in ADB (2014). Likewise, the legend “Vietnam” represents Vietnamese listed companies with their average score taken from ADB (2014). It is not surprised that CG scores by companies in EVN group are lower than the average score achieved by Vietnamese listed companies and much lower than that of Thai companies. The overall results show that the gaps between Thai companies and those in EVN group are quite large. There is 60.3 points difference between Thai companies and EVN corporate, which is a huge gap. There are scoring differences between joint stock companies and one-member limited liability companies within EVN group. Joint stock companies (listed and non-listed) tend to have higher scores than that of one-member limited liability companies (EVN, GENCOs, NPT and Power corporations). This is understandable since joint stock companies have more than just one owner and they are normally under higher level of supervision by many stakeholders, especially listed companies are strictly overseen by the State Securities Commission and the stock exchange where their shares are listed. Figure 2 shows that the publicly listed joint stock company scored 33.1 points, slightly lower than the mean score of Vietnamese companies, while the non-listed joint stock company scored much lower, at 13.9 points. EVN one-member limited liability companies scored even lower, in the bottom range from 8.4 points to 15.1 points. These overall results suggest that companies in EVN group and especially the headquarters have to do much to improve CG practices and to close the gaps with companies in other ASEAN countries. 3.2.Specific findings 3.2.1. Rights of shareholders Shareholders have basic rights that every company should respect in good CG practices. These include the rights of owning, registering and transferring shares; to be informed of company’s major transactions affecting the company; participating and voting in shareholder meetings; electing and removing board members; and sharing company’s profits. In this area, EVN listed joint stock companies do better than the average Vietnamese listed companies, while the non-listed companies do worse as show in Figure 3. However, their scores are way lower than that of Thai companies. EVN corporate and its one-member limited liability subsidiaries have 524
7. only one owner, thus, dimension A (Rights of shareholders) is not applicable for them. 10 8.3 6.4 8 4.9 6 2.4 4 2 0 Thailand Vietnam Listed JSC Non-listed JSC Source: Own collaboration. Figure 3.Score by company in dimension A (Rights of shareholders) The survey results of EVN listed joint stock company in this dimension of the reveals the strengths and areas for improvement as follow: Strengths: - Provide non-controlling shareholders a right to nominate candidates for BOD. - Disclose of AGM minutes and resolutions in a timely manner. Weak areas for improvement: - Dividend payment should be paid within 30 days after approval or declaration. - AGM notice should be more comprehensive with rationale and explanation for each AGM agenda, and should be attached with all information needed for shareholders to practice the rights. Audit fees and other non-audit services by external auditors should be disclosed in the notice for AGM and other company’s reports. - AGM minutes should also be more comprehensive with more information on voting results, fully recording the question and answer session. - Disclose comprehensive track records of candidates (including background, experience and qualifications), the voting and vote tabulation procedures. - All directors, inspectors, CEO and other executive members should attend the AGM to answer shareholder questions. External auditor should attend the AGM as well. - The AGM should be held within four months from the end of the fiscal year. - The board’s reports at the AGM must be comprehensive in evaluation of performance of the company, of the board, issues and decisions taken by the board. For EVN non-listed joint stock company, there are many weak areas for improvement. It is important that EVN headquarters should direct its representatives in non-listed joint stock companies to initiate significant CG improvement programs at the boards of those companies. The first step is to strictly comply with the Vietnamese Corporate Governance Code, then to develop a roadmap for listing shares of the companies on stock exchanges. 3.2.2. Equitable treatment of shareholders This dimension is not applicable to EVN corporate and its one-member limited liability subsidiaries. For the listed and non-listed representative companies, their scores in this dimension are presented in Figure 4. 525
8. 15 14.3 12 6.6 9 4.4 6 3.5 3 0 Thailand Vietnam Listed JSC Non-listed JSC Source: Own collaboration. Figure 4.Score by company in dimension B (Equitable treatment of shareholders) The two EVN listed and non-listed representative companies scored lower than the average Vietnamese listed companies and much lower than that of Thai companies. This suggests that shareholders are not treated equally. In fact, EVN as a big SOE shareholder has profound influence on decisions of the boards of its subsidiaries and associates. EVN as a controlling shareholder has its representatives seating in the BOD, the SB and in many cases in the executive management team. Representatives must report to EVN regularly, sometimes with inside information that is not available for other minority shareholders. In this dimension, the Scorecard exposes weak areas for improvement as follow, - Companies should have one resolution for each issue, and there should be an English version for each. Other disclosed materials should have English versions as well. - Profiles of directors seeking for election/re-election, and the auditors seeking appointment/re-appointment should be included in the notice of AGM. - Dividend policy must be explained. - Companies should disclose policies prohibiting directors and employees to benefit from insider knowledge, and reports of directors’ dealings in company shares within 3 days. - Companies should have policies for reviewing related party transactions by directors and key executives; disclose related-party transactions; have policies on loans to directors at arm’s length basis; and have policies to protect minority shareholders from abusive actions. - Companies should develop electronic voting procedure to facilitate cross border voting. - Detailed information and documents relevant to make AGM decision by all shareholders must be available on company website and sent out to shareholders at least 20 days in advance of the meeting. 3.2.3. Role of stakeholders In this dimension, the scores of EVN and its subsidiaries are terribly low, achieving points of less than one, while Thai and Vietnamese listed companies scored on average 5.6 points and 3.2 points respectively as illustrated in Figure 5. 10 8 5.6 6 3.2 4 2 0.5 0.5 0.5 0.5 1.0 0.5 0 Thailand Vietnam EVN GENCOs NPT Power Listed JSC Non-listed Corp. JSC Figure 5.Score by company in dimension C (Roles of stakeholders) 526
9. Source: Own collaboration. Regarding the recognition of stakeholder roles, there are some observable facts about EVN and its subsidiaries activities such as: EVN and some of its subsidiaries have philanthropic activities to some extent. EVN does originate some energy saving programs nation-wide and participates in global efforts such as the Earth Hour initiated by the World Wide Fund for Nature. But these activities are reported briefly or not at all to the public. On the other hand, there is no clear policy in the process of decision making on investment in power projects that indicates EVN would prefer less polluting technologies over the more polluted ones. Creditors and suppliers are rarely mentioned if ever in EVN reports. Conclusively, the very low points gained in this dimension as revealed by the Scorecard are because EVN and its subsidiaries do not have: Policies and practices dealing with customers’ health and safety, anti-corruption, creditor rights protection, environment and community protection activities; Criteria for selecting suppliers; Specific contact points for stakeholders to raise concern and report complaints about violations of their rights; and Whistle-blow mechanism, policies and processes for employees to voice complaints. 3.2.4. Disclosure and transparency 25 17.1 20 12.1 12.8 15 10 4.5 4.5 4.5 4.5 3.7 5 0 Thailand Vietnam EVN GENCOs NPT Power Listed JSC Non-listed Corp. JSC Figure 6. Score by company in dimension D (Disclosure and transparency) Source: Own collaboration. Robust disclosure establishment that fosters transparency is so important for any company as an indication of good CG practice. Strong disclosure regime facilitates monitoring by many stakeholders, enables shareholders to effectively exercise their ownership rights, and helps improving public awareness of the company’s activities and performance. As explained in Chapter 3, public understanding and sympathy is crucial for EVN group at this stage. However, scorings of EVN and its subsidiaries in this dimension, except for the listed company, are way lower than those of Vietnamese and Thai listed companies as presented in Figure 6. This obviously indicates the lack of timely disclosure and transparency in EVN group. As the survey uncovers, except for the listed company, EVN and its subsidiaries: - Have terribly poor quality of their annual reports. In fact, EVN issues just one ‘annual’ report for every two years. Its subsidiaries do not even have their annual reports. EVN annual report is poor in its contents. It does not disclose key information, facts and figures such as company objectives, key risks, financial performance indicators, major activities that affect the company, relationship with stakeholders, details of a whistle-blow policy (it does not exist actually), biographical details of members of the board/council and executive officers, 527
10. remuneration of key executives and board/council members, identification of independent directors and so on. - Do not have policy for disclosure of related party transactions; information about external auditor such as name of the external auditor, audit fee and other service fees. - Do not disclose quarterly, semi-annual and annual financial reports; financial and legal position of the company; the responsibilities of the boards and board member evaluation (evaluation is actually not conducted). - Financial statements are not prepared in line with International Financial Reporting Standards. 3.2.5. Responsibilities of the board Board composition of 12 surveyed companies in EVN group is presented in Table 2. EVN and its subsidiaries have different board compositions. While NPT have similar board set-up with EVN headquarters, GENCOs and distribution corporations do not actually have a board. Each GENCO has a chairman representing the board. The CEO position is undertaken by another person. For each distribution corporation, the chairman assumes the CEO position as well. Thus, in each distribution corporation, which is relatively large SOE in Vietnam, there is only one person who acts as the sole director and the chief executive manager at the same time. In fact, there is no distinction between directing and managing jobs at GENCOs and distribution corporations. All 12 companies in this analysis do not have any independent board member. Table 2.Company board composition Board composition EVN GCs NPT PCs PLC NLC Independent member 0 0 0 0 0 0 Non-executive member 4 1 4 0 2 2 Executive member 1 0 1 1 3 3 Total 5 1 5 1 5 5 Source: Own collaboration. Note: “EVN” is for EVN headquarters; “GCs” is for GENCOs; “PCs” is for Power Distribution Corporations; “PLC” is for the publicly listed joint stock company chosen for studying in this report; “NLC” is for the non-listed joint stock company. Roles and responsibilities of the board are defined in OECD (2004) as “The corporate governance framework should ensure the strategic guidance of the company, the effective monitoring of management by the board and the board’s accountability to the company and the shareholders.” The boards in EVN headquarters and in its subsidiaries fall short from this definition as exposed by the companies’ very low scores, which are presented in Figure 7. The survey result in this dimension shows that there are many areas for improvement, which include: - Lack of clear definitions of CG policy, of board responsibilities in terms of directing and monitoring functions, and accountability. - Lack of a comprehensive board charter (in fact, it is hidden in the articles of incorporation), aspects such as CG policy, disclosure, risks management, trading with related parties, evaluation, remuneration and compensation are not mentioned. - Absence of independent directors in the boards, and board committees. Board members’ 528
11. competent qualities such as skills, experiences, business knowledge, financial knowledge and industry experience are not disclosed. - No board and individual performance evaluation against key performance indicators which are either not exist or too broad. Boards do not evaluate executive managers as well. - Board meetings are not scheduled before the start of the financial year. Meetings are always organized because of issued raised from the executive management team, which are so many. As in the case of EVN, the Members’ Council produces about 700 decisions and resolutions per year to deal with various proposals from the executives. Meetings are usually not well prepared. Board members can access to all documents regarding the topics discussed in the next meeting some days prior to the meeting. However, some members often come to the meeting with little detailed knowledge about what are to be discussed in the meeting. Each meeting usually bundles five to six topics for discussion one by one. And habitually, the first two or three subjects would consume all of the time allocated for that meeting, leaving the other topics unsolved till the other day. For GENCOs and distribution corporations, there is even no board meeting at all. - Very low board effectiveness. Board’s directing and monitoring functions are buried in and mixed with day-to-day managing functions of the executives. There are no clearly observable activities of the board performing key functions like “reviewing and guiding corporate strategy, major plans of action, risk policy, annual budgets and business plans; setting performance objectives; monitoring implementation and corporate performance” and overseeing management as stated in OECD Principles of Corporate Governance (OECD, 2004). 40 32 22.5 24 16 8.3 6.4 5.9 8.5 4.8 8 3.2 1.6 0 Thailand Vietnam EVN GENCOs NPT Power Corp. Listed JSC Non-listed JSC Figure 7. Score by company in dimension E (Responsibilities of the board) Source: Own collaboration. At Level 2 of the ASEAN Corporate Governance Scorecard, there is no evidence to give either bonus or penalty points to EVN and its subsidiaries, except for the non-listed joint stock company that got a minus point for not clearly identify its independent member of the board. The specific findings have shown that EVN and its subsidiaries score very low in all five dimensions of the OECD Principles of Corporate Governance measured using the ASEAN Corporate Governance Scorecard, except for the listed joint stock company which has an overall score at about the average of Vietnamese listed companied reported in ADB (2014). The findings reveal many areas for CG improvement in EVN group. 4. CONCLUSIONS AND SOLUTIONS TO IMPROVE EVN’S CORPORATE GOVERNANCE In the efforts of SOE equitization– the key pillar of the economic restructuring, calling foreign investors to buy an SOE stake is a solutionof some State owned corporates like EVN. However, within the next three to ten years, EVN group will have to face to major challenges 529
12. which are both complex and interconnected with one another and those challenges will reduce the foreign investors’ attention: (a) achieving operational improvements to reduce costs and increase efficiency; (b) enhancing the capacity to manage operational and financial risks; (c) improving EVN public image to overcome political and public concerns over affordability of power tariffs; (d) being credible to enable easier access to international finance;(e) able to manage huge investment programs; and (f) preparing subsidiaries to operate as independent and self-contained companies in the competitive power market. To deal with those challenges, it is obvious that EVN group should substantially improve CG in EVN headquarters and in its subsidiaries as a critical part of the group restructuring program the 2016-2020 period. To close the gaps with companies in the region to take opportunity of attracting foreign investment in integration period, EVN group must take actions addressing weak areas in the following five dimensions. 4.1. Improve Rights of Shareholders Actions applicable to joint stock companies are: - To prepare comprehensive AGM notice to include rationale and explanation for each agenda, audit fees and non-audit service fees; full track records of director candidates; voting rules and vote tabulation procedures; attach otherneeded information for shareholders to practice their rights. - To prepare comprehensive AGM minutes and resolutions to disclose in details the voting results, the question and answer section. - To organize the AGM within four months from the end of the fiscal year in which all directors, inspectors, the CEO and the external auditor must attend and be ready to answer shareholder questions. - To make a comprehensive board’s report at the AGM to include evaluation of the company’s performance, of the board, of each director, of executive management team, and of major issues and decisions taken by the board with rationale and explanation. - To allocate resources to make sure that dividend is paid within 30 days after approval or declaration. - For non-listed joint stock companies, to develop and disclose a roadmap for listing the company’s shares on the stock exchanges. 4.2.Improve Equitable Treatment of Shareholders Actions applicable to joint stock companies are: - To develop and disclose policies for addressing and reviewing related party transactions; loans to directors, executives and staff; protection of minority shareholders from abusive actions. - To develop and disclose company’s code of ethics in which directors and staff are prohibited from benefiting with insider knowledge; policy to report director’s dealing in company shares within 3 days. - To develop electronic voting procedure to facilitate cross border voting. - To put detailed information and documents relevant to make AGM decision by shareholders on company’s website and to send them to all shareholders at least 20 days in advance of the meeting. - To issue one resolution for each subject in Vietnamese and English. - To explain company’s dividend policy. - To disclose detailed profile of directors seeking for election and auditors seeking for appointment in the AGM notice. 530
13. 4.3.Improve Role of Stakeholders Actions applicable to EVN and all of its subsidiaries and associates are: - To develop and disclose policies and practices dealing with anti-corruption, customers’ health and safety, creditor rights protection, suppliers selection criteria, environment and communities protection. - To develop and disclose a whistle-blow mechanism including processes for staff to voice complaints. - To public contact points for stakeholders to raise concern and complaints. 4.4.Improve Disclosure and Transparency Actions applicable to EVN and all of its subsidiaries and associates are: - To prepare a comprehensive annual report including key operational and financial information (objectives, risks, KPIs and major activities); CG policy and compliance; whistle-blow policy and processes; biological details of directors, executives and their remuneration; independent directors; relationship with stakeholders; related party transactions; external auditor, its audit and non-audit fees. - To broadcast quarterly, semi-annual and annual financial reports on company’s website; and to file to the Stock Exchange Commission and the stock exchanges for further publication to the media. - To develop a plan to prepare company’s financial statements in line with IFRS and in both Vietnamese and English. 4.5.Improve Responsibilities of the Board Actions applicable to EVN and all of its subsidiaries and associates are: - To setup a BOD in each company with proper composition and defined functions which include guiding and reviewing company strategy, internal control, risk policy, budget and business plan, performance objectives and their implementations. - To develop company CG code and board charter with clear board functions and responsibilities, CG policy, disclosure, risks management, related party transactions, evaluation, remuneration and compensation, and competent qualities of directors. - To practice board evaluation, individual director and executive evaluation. - To practice planning board meeting schedule before the start of the fiscal year and to make sure directors receive all needed information and have enough time to study the issues or subjects before attending the meetings. - To nominate true independent directors to the board. - To create key committees with their clear charters headed by independent directors. REFERENCES [1]. ADB (2014). ASEAN Corporate Governance Scorecard - Country Reports and Assessments 2013-2014. Retrieved September 2015, from the ASEAN Capital Market Forum website: [2] ADB (2014), Socialist Republic of Viet Nam: Strengthening Support for State-Owned Enterprise Reform and Corporate Governance Facilitation Program, from PDF website: [3]. EDF (2014). EDF Reference document: Annual Financial Report 2014. Retrieved September 2015, from PDF website: dedies/espace-finance-en/financial-information/regulated-information/reference- document/EDF_DDR_2014_VA%281%29.pdf. [4].EVN (2014). EVN Internal Reports on Operation of EVN Subsidiaries and Associates for the Year 2013. Hanoi (Print). 531