Analysis and assessment of current rules Corporate law in Vietnam

1 analysis , assessment of current rules

1.1 comparison other jurisdictions

1.1.1 flexibility in choosing corporate governance structures
1.1.2 separation of supervisory , management bodies
1.1.3 vesting of executive powers


1.2 problems

1.2.1 understanding corporate governance , role of management structures
1.2.2 state-owned enterprises
1.2.3 investor protection

analysis , assessment of current rules
comparison other jurisdictions
flexibility in choosing corporate governance structures

although vietnam s corporate law adopted anglo-american legal principles, common law jurisdictions grant businesses greater flexibility in choosing corporate governance structures. loe, however, imposes mandatory internal governance structures. has been criticised failing give companies latitude adapt corporate governance structures suit needs. anglo-american law allows directors delegate powers sub-committee or person. meanwhile, in vietnam, subcommittees can established assist bom, latter cannot delegate powers former. imposition of mandatory corporate governance structures without delegation of powers leads less flexibility , efficiency.

comparisons between jurisdictions


separation of supervisory , management bodies

internal governance structures important in supervising company managers. in us, supervisory body subsumed within single-tiered board of directors, whereas in vietnam, ic independent body. through separation of supervisory , management functions, vietnamese corporate law model, @ least theoretically, ensures bom held greater degree of accountability independent checking mechanism. however, there no hierarchy vietnamese ic , bom. contrasts german two-tiered board model scs, aufsichtsrat (supervisory board) hierarchically superior vorstand (management board). because ic not recognised superior institution, has limited authority on bom. in practice, many supervisors low level employees within company. although institutionally independent, members of ic are, in reality, dependent on employers livelihoods, , therefore serve weak check against mismanagement bom or director.

vesting of executive powers

in vietnam, executive powers vested solely in director while in germany, executive powers shared equally amongst members of vorstand. encourages consensus decision-making in german companies responsibility shared amongst members of vorstand. can further contrasted japan, corporate law not designate positions corporate officers (the vietnamese equivalent of director) , executive powers largely retained within board of directors (the vietnamese equivalent of bom).

problems
understanding corporate governance , role of management structures

corporate governance in vietnam seen more management framework rather system accountability , protecting minority shareholders. in particular, loe not mandate separation of ownership , management. separation of ownership , management promotes accountability allowing managers objectively appraised. on other hand, owners serve managers more pursue own interests, possibly @ expense of interests of minority shareholders.

state-owned enterprises

following introduction of loe, soes converted single-organisation-owned llcs. however, state retains many powers , directly involved in management decision-making. government officials selected run companies political reasons. lack of business expertise , profit motive has led inefficiency , mismanagement of large state-owned enterprises. furthermore, since 3 supervisors can appointed, there limited monitoring on company managers. in 2010, state-owned shipbuilding firm vinashin ended in bankruptcy, following mismanagement , false reporting of financial statements. reflects inadequate monitoring , auditing mechanisms soes.

investor protection

the loe increasingly recognizing interests of minority shareholders introducing new avenues them hold management accountable. nonetheless, stringent prerequisites including higher shareholding requirements , need show evidence before minority shareholders can call shareholders meeting, investor protection in vietnam still limited compared other jurisdictions. other shortcomings of loe include limited opportunities shareholders request meeting, no imposition of legal responsibilities on board members approve unfair transactions, no shareholders rights sue in corporate governance structure (for scs), , shortage of provisions require disclosure obligations , directors avoid insolvent trading.

phuoc & partners vietnamese law firm, vietnamese attorney, vietnamese solicitor, vietnam company law

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