Regulations on company secretary in singapore and possibility to apply in vietnam

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS OF HO CHI MINH CITY NGUYEN HONG KHAI REGULATIONS ON COMPANY SECRETARY OF SINGAPORE AND POSSIBILITY TO APPLY IN VIETNAM Major: Law of Economics Code: 60380107 MASTER THESIS - LLM HO CHI MINH CITY - 2017 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS OF HO CHI MINH CITY NGUYEN HONG KHAI REGULATIONS ON COMPANY SECRETARY OF SINGAPORE AND POSSIBILITY TO APPLY IN VIETNAM Major: Law of Economics Code: 60380107 MASTER THESIS - LLM Thesis Advisor: Dr HOANG THI THANH THUY HO CHI MINH CITY - 2017 UNDERTAKINGS o  I, the undersigned, with full name NGUYEN HONG KHAI – Code: 7701250592A, be attending Master Class with major in Laws of Economics, Faculty of Law, University of Economics Ho Chi Minh City, being the writer of the Master Thesis “REGULATIONS OF COMPANY SECRETARY OF SINGAPORE AND POSSIBILITIES TO APPLY IN VIETNAM” (hereinafter referred to as “Thesis”) Hereby undertake that all content presented in the Thesis is result from my independent research with instructions of my advisor Dr Do Hoang Thanh Thuy The Thesis has employed and extracted a number of comments, scientific opinions of other scholars and writers All information are properly sourced with sufficient and accurate evidence Figures and data therein are used with objectiveness and honesty By NGUYEN HONG KHAI CONTENT o  UNDERTAKINGS i ACRONYMS ABSTRACT .1 INTRODUCTION Reasons for adopting this topic Research questions Legal circumtances for adopting research questions .4 Purpose, objects and scope of research Methodology and theory framework 6 Scientific meanings and value of the topic CHAPTER 1: WHAT IS COMPANY SECRETARY? THE ROLE OF COMPANY SECRETARY AND ITS BENEFIT WITH CORPORATE GOVERNANCE IN SINGAPORE 1.1 Overview on company secretary from international-principles perpestives 1.2 Brief of legal basis of company secretary under Singaporean laws 1.3 Analysis on cohesion between company secretary and good corporate governance in Singapore 11 1.4 Key notes 15 CHAPTER 2: CURRENT REGULATIONS OF VIETNAM IN CORPORATE GOVERNANCE 17 2.1 Brief of legal framework on corporate governance in Vietnam 18 2.2 Limitations in corporate governance in Vietnam – analysis on a number of practical cases 23 2.2.1 Limitations in corporate governance in Vietnam .23 2.2.2 Analysis on a number of practical cases 27 2.3 Key notes 30 CHAPTER 3: APPLYING COMPANY SECRETARY AS A MEASURE TO IMPROVE CORPORATE GOVERNANCE IN VIETNAM 32 3.1 How the role of company secretary deal with current issues of corporate governance of Vietnam 32 3.1.1 How can company secretary deal with the current issues in corporate governance of Vietnam? 32 3.1.2 How can company secretary deal with practical cases as described in Chapter 02? 33 3.2 Step-by-step measures in applying company secretary in Vietnam 34 3.2.1 Regularising role of company secretary into regulations of corporate governance in Vietnam 35 3.2.2 Establishment of professional associations for company secretary to ensure the practising and improve corporate governance quality .37 3.2.3 Actively participate in international company secretary organisations to learn and take experience in this field 37 3.2.4 Carrying out propaganda activities for promoting the role of company secretary38 3.2.5 Buiding up and training professional company secretary force .38 3.3 Conclusions 40 APPENDIX BIBLIOGRAPHY ACRONYMS o  ACRA Accounting and Corporate Regulatory Authority AGM Annual General Meeting ASEAN Association of South East Asian Nations BOD Board Of Directors DPI Department Of Planning and Investment EB Executive Board EGM Extraordinary General Meeting FIEs Foreign Invested Enterprises GCGF Global Corporate Governance Forum GDP Gross Domestic Products GM General Manager GTD General Tax Department IFC International Finance Corporation IPO Initial Public Offerings JSC Joint Stock Company LLC Limited Liability Company LOE Law On Enterprise LOI Law On Investment LR Legal Representative MAS Monetary Authorities of Singapore MC Member Council MOF Ministry Of Finance MPI Ministry of Planning and Investment OTC Over-the-counter Martket PC Public Company SBV State Bank of Vietnam SSC State Securities Commisions of Vietnam TPP Trans Pacific Partnership UPCOM Unlisted Public Company Market VACPA Vietnam Association of Certifted Public Accountants VAFI Vietnam Association of Financial Investors VSD Vietnam Securities Depository WTO World Trade Organisation ABSTRACT Vietnam has been a country actively joining in globalization progress by accessing numerous international treaties e.g with the most significant one i.e WTO (since 2007), TPP (which was passed by national assembly in 2016) so far Over time, it has been witnessed that a lot of foreign investors with wide range of nationalities have set up their commercial presence in Vietnam and remarkably contributed to the growth of national GDP To maintain such investment flow-in, one of the contemporary concerns that Vietnamese Government needs to pay effort is how to ensure that the legal framework provide sufficient stipulations and enforcement so that the overall economy and all the parts therein can adapt and develop healthily and efficiently In addition to promulgations of more favorable and attractive investment policies, creation of compliant and reliable atmosphere in field of corporate governance shall be one of the most priorities which Vietnam should have due attention to and taking actions on soonest The thesis firstly provides overview on how corporate governance function in Vietnam is performing in light of current regulations A number of its downsides shall be described purposely to raise needs in locating methods for remedial measures The thesis, after that, will glance at how regulations of Singapore – a high-level developed economy – adopts, defines, stipulates and assure the role of company secretary in corporate governance in Singapore The thesis, finally seeking possibilities on applying such role of company secretary with wishes of improving corporate governance for companies in Vietnam In addition, during the career as a buinsess consultant and basing on the requests from foreign investors, the writer find a necessity to study on the role of the company secretary and how it works to consider the application in Vietnam The expectation would be how to help the corporate governance regulations can approach more with international principle so that the foreign investors not need to spend much time and effort to adapt in Vietnamese legal environment and vice-versa for the domestic investors when investing out Although it is likely that there is not an ease to adopt similarly the role company secretary as defined by Singapore’s regulations to Vietnam at the time being due to underlying discrepancies in legislation and administrations regime between two nations, the writer hope that the thesis can serve as very initial ideas and recommendations so that individuals, companies, and competent authorities who have concerns about this matter can have references, discussions, and make more developments to build up and/or apply any aspect herein to run an effective and transparent business and/or contribute to the reforms of corporate governance in Vietnam soon or later Key words: Corporate Governance, Company Secretary INTRODUCTION Reasons for adopting this topic Vietnam is step-by-step integrating into the worldwide economy, completion of the legal framework, especially for the field of corporate governance, has become a significant element to set up foundation for stabilizing the Vietnamese economy for both private and state sectors Enhancing the national competition index, ensuring the transparency, integrity and compliance are top contemporary priorities of the Government of Vietnam In light of that, the administrative authorities may explore by taking reference from other countries’ models of corporate governance to see how can apply into the current circumstances of Vietnam Dr Vu Bang, President of State Securities Committee of Vietnam (“SSC”) said at the event “Building up roadmap for corporate governance” organized by Hanoi Stock Exchange (“HNX”) - in cooperation with Asia Development Bank - on 23 October 2015: “In the circumstance we are opening our door and intergrating into the world economy, the corporate governance becomes very necessary and urgent requirements”1 As also from statement of Mr Tran Van Dung, Chairman cum General Director of Hanoi Stock Exchange at this seminar: “while Vietnam is seeking for developing a model of corporate governance, the same has been witnessed with a long progress at world level The corporate governance matter is not only necessary matter, but also becomes very urgently to be concerned The development of the corporate governance requires the cooperation and coordination among business community, researchers, analyst, policy makers, … HNX shall be together with companies in enhancing and improving quality of corporate governance areas in Vietnam, providing base to increase the quality of companies ‘governance, and improve the competitive capabilities of the enterprise, so that the ranking of Vietnam in the financial world shall step up”2 Singapore is a country in ASEAN with Vietnam, having high-developed and successful market economy According to the most recent statistical report, its nominal GDP increased to $410.3 billion in 2016, as compared to $408.1 billion in 20153 http://tinnhanhchungkhoan.vn/chung-khoan/quan-tri-cong-ty-khong-phai-la-can-thiet-ma-la-cap-thiet133063.html Step-by-step measures can be performed as follows: 3.2.1.Regularising role of company secretary into regulations of corporate governance in Vietnam Currently in Vietnam, corporate governance is governed by LOE 2014 Listed companies, in addition LOE 2014, is also subejct to Decree 71 The companies operating in particular industries such as banking, insurance, publication, etc are also subject to particular regulations on those fields In order to open an avenue for recognising and adopting effectively role of company secretary in vietnam, Vietnam needs to prepare and take following actions: • National assembly needs to study and add role of company secretary (possibly as defined in a number of provisions in LOE) as a mandatory conditions to all kinds of companies, including ordinary industries or particular industries At the statutory level, scope of duties and responsibilites of company secretary would be a crucial part which provide a corridor so that all relevant governing elements e.g qualifications, trainings, practising licensing, reporting, etc shall be launched out At the first stage and taking prudent approaches, the scope of the duties of company secretary may be minimal and will be increased time after time if it fully adapted and can be enforceable in Vietnam The initial regulations on company secretary may comprise of: o Definition of company secretary under the laws of Vietnam; o Scope of duties of company secretary (may designated for each type of company); o Appoinment of company secretary and mandatory requirements on appointments; and o Admimistrative sanctions and debarment applicable fo company secretary • Government issues decrees providing guidelines on appointment, conditions for appoinments, tenure, scope of responsibilites, sanctions and regulations registration/notice of company secretary to competent on authorities, presentations/disclosures of this position on company’s legal documents and on national data portal; • Relevant ministries such as ministry of justice, ministry of finance, ministry of education and training, etc provides guidelines on training, recognition of professional role of company secretary similarly to other professionals e.g accountant, auditors, lawyers, etc At the first stages, the relevant ministries may organise free training courses for early generations of company secretary to supply a force of professional company secretary to the company environment This is really helpful, especially for small companies who may be under financial burden to remain such functions; • Ministry of Justice, Ministry of Planning and Investment can study to issue regulations on practice for company secretaries by reference to international principles (as recommended by OECD, IFC, AISCA, etc) Nowadays, a lot of seminars/conferences/training sessions organised by those international entities are numerouse Some are favorable especially for developing countries in Vietnam Experts of OECD can be assigned to Vietnam to help with promoting researches, survey, and feasible study on application of company secretary/corporate governance of Vietnam (e.g the publication of Corporate Governance Manual issued in and by cooperation between State Securities Commission of Vietnam and IFC in 2010) Taking advanatges of the expertise of these organisation shall help Vietnam speed up the progress in catching international level; • Making effort to complete the legal framework for corporate governance which is not only for major company or listed company but also for small and medium companies which really needs motivations to grow up rapindly and healthily There would be a concern of this step i.e cost matters in relation to enforce the small/medium companies to adopt and remain this company secretary role At the first stage, the Government can look into possibilities of reducing taxes or other financial obligations so that the small and medium company can have a source of finance to fund this activity This approach, somehow, can be considered as similar to R&D fund applicable to large-scale manufacturing/high-tech companies With such a favorable policy, the Government shall show a seriousness of applying the role of company secretary as well as the corporate goveranance matters in Viet Nam 3.2.2.Establishment of professional associations for company secretary to ensure the practising and improve corporate governance quality Similarly to Singapore which has set up The Singapore Association of the Institute of Chartered Secretaries and Administrators (SAICSA),47 which is a division of ICSA and comprises members, graduates and registered students of the Institute residing in Singapore OR Malaysia established the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA),48 was founded in 1959 as an affiliated body to ICSA OR Hong Kong established Hong Kong Institute of Chartered Corporate Secretary (HKICS),49 Vietnam can consider to establish The Vietnam Association of the Institute of Chartered Secretaries and Administrators (VAICSA) (or with an equivalent name) to provide foundation for company secretary to be socially recognised as well as governing this role in field of corporate governance The establishment of this associations can be as the same way to form of Bar Association (for lawyers), VACPA (for auditors), VTCA (for tax advisors), etc in Vietnam 3.2.3.Actively participate in international company secretary organisations to learn and take experience in this field There are currently many official international organisations offering principles or standards on corporate governance and company secretary to guide other countries to apply and to become member of those organisations, such as: • OECD50 include 35 official members (Vietnam is not a member of this organisation) is an active one offering assistance and guidance in filed of corporate goverance; • ICSA51 was founded in London during 1891 in order to establish and enhance the status of company secretaries, and define the standards of professional conduct to which members should aspire The Institute of Chartered Secretaries and Administrators(ICSA) is an independent, self-regulating body operating under a Royal Charter granted in 1902; 47 http://www.saicsa.org.sg http://www.maicsa.org.my/profile.aspx 49 https://www.hkics.org.hk/index.php?_room=4 48 50 http://www.oecd.org 51 https://www.icsa.org.uk • IFC52 a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries With features of its history, geography, politics, economy, etc Vietnam can study for itself to adapt and become a member of international associations/organisations of company secretary so that it can require technical assistance and/or to obtain experience in order to apply effecitively the role of company secretary in Vietnam The participations in international organisations also helps Vietnam with movements of its Vietnamese company secretary to other countries to work as recognised professionals This is also to remove to gap between Vienam and other countries in the world in terms of level of corporate governance 3.2.4.Carrying out propaganda activities for promoting the role of company secretary Although there are regulations on providing requirements on appointing role of company secretary in companies, governments and competent authorities should also pay attention to organise propaganda activities in order to propogate the role and benefit of company secretary in field of corporate governance In more reality, providing positive impacts so that Vietnamese companies shall not apply “in form only” while the real benefit of this role is not regarded It may be seen that, M&A activities are more popular in Vietnam market where the foreign investors shall seek for potential Vietnamese companies to buy for their quick access into Vietnam The high-level compliance with intensive corporate governance shall help the vietnamese company increase its value by itself when offering its capital for purchasers 3.2.5.Buiding up and training professional company secretary force The building up and training of company secretary shall require to focus on two important elements i.e (i) expertise and (ii) ethics In terms of expertise, company secretary are ones pocessing universal legal knowledge and focusing on corporate governance legal matters In addition to ones who have legal background, others who have knowledge and experience in corporate governance should also be encouraged to become company secretary Those who wish 52 http://www.ifc.org to practice as company secretary shall be requied to complete special training courses on corporate governance, pass exams and participating in real internship periods at sizeable companies as well as become member of professional associations The company secretary are also required to participates in routine sessions organised by those associations to update their knowledge, experience to ensure the quality for performing their duties Expertise and qualifications required from company secretary as follows: 88% 8%2% Familiarity with Legal Documents in relation to the company's… 90% College education 8%0% 74% Well understanding of the company's business Interpersonal skills (good communication, responsibility) Organization skill 25% 0% 86% 10% 0% 82% 12% 2% 59% Well-trained on professional knowledge 35% 2% 2% 45% 49% Analytical skill 25% 57% Company loyalty Other qualities 2%0%0% High Medium Low Source: IFC-RID, (2010), survey on the work of Corporate secretaries in 2003 in publication Corporate Governance, second edition, p.210 In terms of ethics, the company shall be strictly required to participate in training session on ethics, honesty, integrity, etc organised by the professional associations and competent authorities Concurretly, the competent authorities may build up national data base for field of company secretary in which the company secretary shall be ranked and/or to ensure the secretary comply with ethical standard 10% This is to help reduce frauds and other negative actions in corporate governance caused by company secretary 3.3 Conclusions It is time for Vietnam to study the role of company secretary and look into approriate measures to apply such role in area of corporate governance in Vietnam Of note, all the measures should be executed consistently with involvements of all concerning parties including but not limited to the companies regardless of applicable level of corporare governance Due to the gaps in economic developments and other reasons such legal awareness and habit, political and social regime, measures can be adopted step-by-step to avoid possible clutter for business and corporate acitivities The success of applying the role of company secretary shall certainly improve the transperancy and compliance level in business environment in Vietnam BIBLIOGRAPHY I LEGAL INSTRUMENTS Circular 06/2010/TT-NHNN dated February 26, 2010 guiding the organization, governance, administration, charter capital, transfer of shares and supplementation and modification of licenses or charters of commercial banks (replaced Decision 383/2002/QD-NHNN and Decision 1087/2001/QD- NHNN), Vietnam; Circular 20/2015/TT-BKHDT providing guidelines on business registration dated 15 January 2016, Vietnam; Code of Corporate Governance, Singapore, May 2012, Singapore; Code of Governance of Charities and Institutions of a Public Character, April 2017, Singapore; Company Act, original Enactment – Act No 42 of 1967, Revised version 31st Octber, 2006, Singapore; Decree 01/2010/ND-CP on the private placement of shares dated January 4, 2010, Vietnam; Decree 102/2010/ND-CP dated October 1, 2010 on implementing a number of articles in the Law on Enterprises (replaced Decree 139/2007/ND-CP dated September 5, 2007), Vietnam; and Decree 118/2015/NĐ-CP providing guidelines on implementation of Law on Investment dated 27 December 2015, Vietnam; Decree 30/2009/ND-CP dated March 30, 2009 amending and supplementing a number of articles of Decree No 105/2004/ND-CP dated March 30 2004, on independent audits, Vietnam; 10 Decree 43/2010/ND-CP dated April 15, 2010 on business registration (replaced Decree 88/2006/ND-CP dated August 9, 2006), Vietnam; 11 Decree 78/2015/ND-CP providing guidelines on business registration dated November 2015, Vietnam; 12 Decree 96/2015/NĐ-CP providing guidelines on implementation of Law On Enterpsie dated 19 October 2015, Vietnam; 13 Decree105/2004/ND-CP dated March 30, 2004 on independent audit, Vietnam; 14 Law on Enterprises No 60/2005/QH11 adopted bythe National Assembly dated November 29, 2005, as amended by the law on amending a number of articles of laws relating to capital construction dated June 19, 2009, Vietnam; 15 Law on Enterprises No 68/2014/QH13 adopted by the National Assembly dated November 26, 2014, Vietnam; 16 Law on Securities No 70/2006/QH11 adopted by the National Assembly dated June 29, 2006, Vietnam; 17 Laws on Investment No.59/2005/QH11 adopted by the National Assembly of Vietnam on November 29, 2005, Vietnam; 18 Laws on Investment No.69/2014/QH13 adopted by the National Assembly on November 26, 2014, Vietnam; II REFERENCE BOOKS 19 Asian Corporate Governance, (2007), Best Practice in Asian Corporate Governance, Asian Productivity Organization Publisher; 20 Belinda Wong, (2015), Hong Kong Company Secretary’s Practice Manual, CCH Hong Kong Limited as Publisher; 21 David Martin, (2014), One- Stop Company Secretary, ICSA Publishing Limited; 22 Douhlash Armour, (2015), the ISCA Company’s Secretary Checklist, ICSA Publishing Limited; 23 H.M.William, (2001), The Private Company’s Secretary Manual; 24 Helen Ashton, (2008), Company Secretary - A Guide to Statutory Duties and Responsibilities, Kogen Page Limited Publisher; 25 Joyce Koh & Annabelle Yip, (2014), The Evolution of Corporate Governance in Singapore, a write-up, p.3-8; 26 Kevin Keasey, Steve Thompson and Mike Wright, (2005), Corporate Governance – Accountability, Enterprise and International Comparisons, Wiley Publisher; 27 OECD, (2014), Risk Management and Corporate Governance, OECD Publisher; 28 OECD, (2017), Survey of Corporate Governance Frameworks in Asia, OECD Publisher; 29 Pham Hoai Huan, (2017), Typical disputes in corporate goverance (Tranh Chap Dien Hinh Trong Quan Tri Doanh Nghiep), National Politics Publisher; 30 Rogen Mason, (2014), the company secretary's desktop guide, Thorogood Publisher; III ARTICLES 31 Azuka, E.B &Agomuo, (1993), Modern Secretarial Duties for Polytechnics, Aba, Model Academic Publisher Limited 32 Cletus I Emeti.Phd, (2007), Department of Business Administration, Niger Delta University, Wilberforce Island, Bayelsa, Challenges and prospects of ethical secretaries in unethical work environment; IV GUIDELINES 33 Berkshire Hathaway Inc, (2012), Corporate Governance Guidelines; 34 IFC, (2008), Serbian Corporate Governance Manual, Second Edition; 35 IFC, (2010), Advisory Services in East Asia and the Pacific, Corporate Governance Manual, Second Edition; 36 L&T Finance Holding, (2015), Guidelines on Corporate Governance; 37 OECD, (2004), Principles of Corporate Governance; 38 The Coca-cola Company, (2014), Corporate Governance Guidelines 39 Walt Disney, (2014), Coporate Governance Guidelines; V INTERNET 40 http://enternews.vn/bao-dong-thuc-trang-quan-tri-cong-ty-cua-dn-viet-nam109672.html 41 http://kinhtevadubao.vn/chi-tiet/146-8228-quan-tri-cong-ty-o-viet-nam-conyeu-kem.html 42 http://tapchitaichinh.vn/nghien-cuu trao-doi/trao-doi-binh-luan/thuc-tienquan-tri-cong-ty-niem-yet-tai-viet-nam-va-mot-so-de-xuat-79791.html 43 http://www.businessdictionary.com/definition/company-secretary.html 44 http://www.coca-colacompany.com/investors/corporate-governanceguidelines 45 http://www.cscs.org/corporate-secretary 46 http://www.doanhnhansaigon.vn/goc-nhin-quan-tri/quan-tri-doanh-nghiepviet-ton-tai-hay-khong-ton-tai/1087257/ 47 http://www.hoangminhlaw.com/tin-tc-s-kin/3603-thu-ky-hoi-dong-quantritro-ly-hoi-dong-quan-tri-co-vai-tro-gi.html 48 https://en.wikipedia.org/wiki/Company_secretary 49 https://www.icaew.com/-/media/corporate/files/library/collections/onlineresources/briefings/role-of-the-company-secretary.ashx 50 https://www.icsa.org.uk/professional-development/careers/being-acompany-secretary 51 https://www.oecd.org/corporate/ca/corporategovernanceprinciples/40823806 pdf 52 https://www.oecd.org/daf/ca/corporategovernanceprinciples/40838127.pdf 53 https://www.societycorpgov.org/governanceprofessionals/about/roleofsecret ary VI OTHERS 54 Aydin Filiz, The company Secretary within Corporate Governance Framework, dissertation, of the University of St Gallen, School of Management, Econimics, Law, Social Sciences and International Affairs to obtain the title of Doctor Oeconomiae, 2013; 55 Loren Wulfsogn – IFC Governance Knowledge Publication, The Company Secretary as polymath, 2014 APPENDIX A SAMPLE OF ANNUAL RETURN OF SINGAPORE (secretary parts) A SAMPLE OF ANNUAL RETURN OF HONG KONG (secretary parts) ANNUAL SALARY OF LEGAL SECRETARY IN SOME COUNTRIES Permanent Salary per annum Country 2015 2016 Note 180-460k (HKD$) Over 07 years of experience) Japan 250-470k (HKD$) – mil (JPY) - mil (JPY) Over years of experience Malaysia 114+ (RM) 120+ (RM) Over 08 years of experience Singapore 100-150k (SGD) 100 – 150k (SGD) Over 08 years of experience Hong Kong Source: Salary survey 2016 issued by Robert Walters – a global specialist prfessional recruitment consultancy ...MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS OF HO CHI MINH CITY NGUYEN HONG KHAI REGULATIONS ON COMPANY SECRETARY OF SINGAPORE AND POSSIBILITY TO APPLY IN VIETNAM Major:... traditional economy to intellectual economy with aim to become a top economy in the world in 2018 One of the reasons that brings the success to Singapore is its effective policy in administering and. .. for Vietnam; o Step-by-step measures in applying company secretary in Vietnam; and o Conclusions Scientific meanings and value of the topic The topic is expected to be a contribution of ideas to