OVERVIEW ABOUT CORPORATION
SSI Securities Corporation (SSI-HOSE) was established in December 1999 and is one of the oldest financial institutions operating in the Vietnamese Stock Market (VSM) Over the past 22 years, SSI has grown rapidly and is currently the largest financial institution in the VSM, with its charter capital increasing by more than 2,400 times With a strong financial foundation, international-standard corporate governance, and a large and professional workforce, SSI provides customers with comprehensive and superior products and services, ensuring maximum benefits for shareholders Currently, the company has an extensive network of operations in major cities throughout Vietnam such as Hanoi, Ho Chi Minh City, and Hai Phong
The main business lines of SSI include Securities Services, Online Services, and Asset Management Services In addition, the company’s capital source business activities include foreign exchange transactions, capital investment through deposit contracts, loan contracts, trust services, repurchase agreements (Repo) of bonds, fixed-rate interest paper trading, and other specially structured transactions Furthermore, the company is also involved in investment and investment banking services and has a subsidiary called SSI Asset Management Co., Ltd.
Through a long-term development process, with a history dating back to 1999, SSI has become the first Securities Company to achieve a market capitalization of over 1 billion USD. Especially in 2022, SSI successfully issued over 496 million shares to shareholders for 15,000 VND per share, thereby increasing its charter capital to 14,911,301,370,000 VND and maintaining its position as the largest Securities Company in Vietnam.
Having operated for 22 years and contributed significantly to the Vietnamese stock market, SSI has been honored by numerous prestigious organizations within and outside the country, such as the Asia Money Brokers Poll for 10 consecutive years In 2022, SSI overwhelmingly won
28 out of 29 categories Notably, SSI continued to lead the category of "Best Individual Customer Broker in Vietnam." Hundreds of awards have affirmed SSI's pioneering position and recognized its relentless efforts to bring the best quality services to customers They
2 simultaneously demonstrate the outstanding reputation of the SSI brand in the market, attesting to the strong potential of the Company in terms of human resources quality, financial resources, and an extensive network of partners nationwide.
SSI’s mission is to connect investment opportunities with financial resources, and this orientation is reflected in all of SSI’s products and services, both now and in the future In addition, SSI maintains its core values First is “ready to solve” - listening and focusing on finding the best solution for each specific customer need Second is “deep expertise” - as a financial industry expert, SSI continues to update and improve its professional skills to meet all customer expectations at SSI Finally, “creative stamping” encourages and creates every condition for colleagues to have full authority to think creatively in their profession for the benefit of SSI and its customers.
Therefore, SSI deserves the success it has achieved in recent years, and that is why the author chose SSI to analyze.
CORPORATE GOVERNANCE ANALYSIS
Corporate Governance Analysis
2.1.1 Analysis of Factors that Shape the Quality of the Governance System in
2.1.1.1 Efficiency of Local Capital Markets
After two years of grappling with the COVID-19 pandemic, the world continues to face numerous new challenges in 2022, including geopolitical conflicts and supply disruptions that have intensified inflationary pressures, forcing nations to swiftly tighten monetary policies The surge in interest rates, at a pace and scale not seen in over 20 years, by a range of major Central Banks worldwide, has tightened global financial conditions and reversed global economic growth This trend has also propelled the US dollar (USD) to its highest level in two decades, exacerbating the burden of debt in emerging markets and developing economies The outlook for the global economic and trade situation in 2022 does not hold many bright prospects, especially in the latter half of the year, as major economic organizations continue to downgrade global economic growth forecasts.
In this context, the Vietnamese economy in 2022, despite not being immune to adverse impacts, demonstrated strong resilience and recorded promising results The GDP growth for the entire year of 2022 reached 8.02% compared to the same period, marking the fastest growth rate since
1997 and positioning Vietnam as one of the countries with the highest growth rates in the Asian region The growth momentum was evenly distributed across most sectors, the main areas of the economy, as the economy fully reopened after COVID-19, along with fundamental factors stemming from domestic consumption and FDI inflows Foreign direct investment (FDI) inflows in 2022 showed robust growth, reaching $22.4 billion, a 13.5% increase compared to the same period, surpassing the pre-COVID-19 average growth rate Vietnam has benefited directly from the trend of production relocation to diversify the supply chain.
Figure 1: Quarterly GDP growth statistics
The year 2022 posed significant challenges for monetary policy management, as the Vietnamese economy faced pressure from the trend of rising inflation, interest rates, the US dollar globally,and difficulties in the domestic Securities Market, Real Estate, and Corporate Bond Market The monetary policy throughout 2022 was flexible with a tightening tendency, aimed at stabilizing the domestic currency market, while still maintaining favorable conditions to support economic growth The State Bank of Vietnam (SBV) implemented two interest rate hikes in 2022 (with a total increase of 200 basis points) to alleviate pressure on the exchange rate and inflation.Overall interest rates in the market have returned to the pre-COVID-19 level (or even higher in some cases, such as mortgage interest rates) The domestic currency depreciated by only 3.5% against the USD in 2022, a much lower depreciation rate compared to other countries in the region Credit was estimated to increase by about 14.5%, and the basic system liquidity was ensured.
Figure 2: Exchange rate fluctuations statistics.
Figure 3: Stock price fluctuations statistics ( 2018 - 2022 ) - ( Source: Vietstock )
The stock market, in recent years, has experienced significant volatility, especially during the period of the pandemic from 2021 to the present Stock prices saw a sharp peak from 2021 to early 2022, but experienced a substantial decline in 2022 and early 2023 The year 2022 marked a period of great turbulence and challenges for the Vietnamese Securities Market, with the VN- Index plummeting by 32.78% compared to the end of 2021, recording the sharpest decline since the global financial crisis in 2008 The peak of the VN-Index was 1,536.45 points established in January 2022, while the trough was 873.78 points set in November 2022, signifying a 43% drop from the peak.
In the face of increasing interest rates and tight capital management policies from domestic and international financial institutions, raising capital at a reasonable cost is a difficult problem for the entire economy Despite this challenge, SSI has successfully raised and maintained stable short-term loan capital This not only demonstrates SSI’s operational capacity and keen market evaluation ability but also reflects the increasing trust of SSI with credit institutions both domestically and internationally.
2.1.1.2 Extent to which the legal system protects all shareholders
The legal system in Vietnam has undergone significant changes, shifting from an overly protective stance towards majority shareholders to enhancing the protection of minority shareholders The 2020 Law on Enterprises (LOE) and the 2019 Law on Securities (LOS), along with their accompanying guidelines, have introduced more robust tools to encourage shareholder activities, including those of risk-taking fund investors They can leverage these tools and new mechanisms to pursue either personal or corporate interests The objectives of the LOE (2020) and LOS (2019) are to empower shareholders in overseeing the board and balancing the board's authority.
Furthermore, the new Securities Law also promotes transparency in day-to-day management,specifying reporting obligations and disclosures for publicly listed companies, listing organizations, securities firms, fund management companies, the Securities Trading Center, and the Securities Exchange Overall, companies operating in jurisdictions where the legal system safeguards the rights of minority shareholders are likely to receive higher evaluations in the stock market compared to those operating in countries with lax regulations.
The legal system in Vietnam is undergoing significant adjustments to optimize the corporate governance structure, including ownership and board management, merger processes, dissolution, and protection of shareholder rights According to some sources, while the corporate governance environment in Vietnam is still in the developmental stage, there are positive signs of improving the quality of governance and promoting transparency in business operations. According to the National Corporate Governance Assessment Report conducted by the Vietnam Corporate Governance Forum, the adoption of the Best Corporate Governance Code is increasingly receiving attention and strict implementation by businesses in Vietnam This has contributed to creating a fairer, more transparent, and competitive business environment, thus attracting the interest of investors both within and outside the country.
It is important to note that, according to information from the Ministry of Finance, Vietnam has issued Decree 71/2020/ND-CP regarding Corporate Governance for State-invested companies. This Decree has established a more solid legal basis to strengthen management within companies, ensuring the rights of related parties and creating more favorable conditions for investment and business operations in Vietnam Overall, the development and improvement of legal regulations regarding corporate governance in Vietnam are creating a stable and attractive business environment, demonstrating the strong commitment of the government and relevant authorities to building a sustainable and developed economy.
Below is a list of regulations and laws referenced in the context of businesses in Vietnam:
- 2020 Law on Enterprises (LOE 2020): This important law governs the establishment, management, reform, dissolution, and related activities of enterprises.
- 2019 Law on Securities (LOS 2019): This law regulates the activities of listed companies, including provisions on information disclosure, listing, trading, and securities investment.
- 2019 Vietnam Corporate Governance Code of Best Practice for Public Companies (CG Code 2019): This code establishes the best principles and standards for corporate governance applicable to joint-stock companies in Vietnam.
- Decree 155/2020/ND-CP (Decree 155): This is a decree of the Government guiding the Securities Law, with a special chapter focused on corporate governance of listed companies.
- Circular 116/2020/TT-BTC (Circular 116): This is a circular of the Ministry of Finance guiding provisions on corporate governance applicable to listed companies in Decree 155/2020/ND-CP.
- Circular 96/2020/TT-BTC (Circular 96): This is another circular of the Ministry of Finance related to corporate governance.
Having a strong understanding of the regulations in these legal documents will help businesses operate effectively, comply with the law, and build credibility in the business market.
Management behavior is believed to be strongly influenced by society and culture, where activities that might be considered acceptable in some societies are deemed inappropriate in others Not only do cultural values significantly impact the willingness of managers to engage in certain activities and self-serving behavior, but they also influence the relationship between the business and its stakeholders These values play a crucial role in the development of governance systems, despite their complexity and difficulty to quantify According to the theory of the renowned social psychologist Geert Hofstede, a culture can be evaluated based on six cultural dimensions.
Figure 5: Geert Hofstede’s cultural dimension theory
In Vietnamese culture, there is acceptance of a hierarchical order in which everyone has a place without needing further justification Additionally, Vietnamese society encourages strong relationships and values equality, solidarity, and quality in their working lives, resulting in lower female representation on boards in high-masculinity cultures Furthermore, companies need to ensure stakeholders that the board of directors adequately addresses their individual concerns and needs In practice, many Vietnamese consider their coworkers a "second home" and are deeply invested in what happens there, even beyond the pure context of work.
Moreover, in Vietnam, hard work is undertaken when necessary but not for its own sake, and the development of long-term relationships is key to success Last but not least, Vietnam adheres to long-standing traditions and beliefs, persisting in achieving set goals Finally, Vietnamese culture is characterized as restrained and pessimistic, as people do not emphasize leisure time much and control the gratification of their desires.
2.2 Board of Directors: Duties and Liabilities
2.2.1 The Operations of the Board
Figure 6-7: Company overview and organizational structure summary (Source: 2022 Annual Report)
Based on the organizational structure chart of SSI, we can easily see that this is a one-tier board model It includes the General Meeting of Shareholders, the Board of Directors - Investment Council (BOD), and the Executive Board (EB).
Board of Directors: Selection, Compensation, and Removal
In the organization of SSI, all members of the board of directors are people with diverse professional knowledge, and half of them have previously held various high-level management positions For example, Mr Hironiri Oka previously held many senior positions at Daiwa Corporation and began to take on tasks and responsibilities as the head in 1994 Besides, Mr. Pham Viet Muon, previously, was the Deputy Head of the Government Office and Deputy Head of the Standing Committee for Innovation and Business Development
From this, it can be seen that the board of directors of SSI are all capable people with experience and qualifications to effectively manage and control the company This is demonstrated through SSI’s business results in the past year, along with the achievements that the company has achieved
As we know, every company needs directors with special expertise that suits the functional needs and situations of the company The board of directors of SSI also includes people with very special expertise SSI is essentially a financial company, so the team of the company is also particularly strong in this aspect Directors in strategy, finance, risk management, accounting, auditing, etc all contribute greatly to the success of the company.
Not only men but also women occupy a significant number of positions on the board of directors and management in companies This also contributes to creating diversity, balance, and richness in the company’s management approach.
In the salary policy for managers and directors, SSI has also realized that attracting and retaining highly qualified experts is very important And each salary level must correspond to the talent of each director SSI has also introduced incentive forms such as a “6:2 stock bonus”
(Owners of 06 shares will receive 02 new shares) This increases the ownership ratio in the company for those who receive bonus shares while reducing the ownership ratio of other shareholders This process is usually carried out to promote shareholder loyalty or to promote employee performance.
In addition, SSI also organized an ESOP stock issuance program to align the interests of employees and the company This initiative aims to attract and promote the effective performance of the company's leadership team.
For SSI, the evaluation of the board of directors’ performance is usually based on two main parts This is also considered the company’s supervisory board The first is the Strategy and Development Subcommittee, where the Board of Directors has designated a member of the Board of Directors to prepare a monthly report on the activities of the Board of Directors, and the results of monitoring the CEO are sent to members of the Board of Directors following the Company’s Charter A member is assigned to be in charge of developing human resources, developing foreign markets, and managing brands.
The second is the Audit Committee under the Board of Directors, which was established according to the Annual General Meeting resolution on June 27, 2020 The Board of Directors has appointed members of the Audit Committee, who are independent members of the Board ofDirectors, with the function of independent monitoring and evaluation of various aspects of theCompany’s operations The activities of the Audit Committee include: Inspect, and supervising the compliance with laws, the Company's charter, and implementation of the Resolutions ofGMS, the BOD, and BOM; The Audit Committee and its Independent members of BOD in theAudit Committee have reported on the operations of Audit Committee and the supervision results in 2022 to shareholders.; Supervise the business operation and financial situation of theCompany in 2022; Supervise the BOD operations and management of BOM in the business operations; Appraise the separated and consolidated financial statements of the Company.;Assess the effectiveness of the internal governance system through reviewing reports of internal audit, internal control, and risk management departments.
Board of Directors: Structure and Consequences
Mr Nguyen Duy Hung is currently the Chairman of the Board of Directors of SSI, and he is also the founder of SSI Securities Corporation He is also the founder and Chairman of the Board of Directors (BOD) of PAN Group Joint Stock Company (PAN - HOSE)
- a leading company in the field of high-quality agriculture and food packaging He is also the chairman of each annual general meeting of the company and is responsible for the work of each meeting Along with that, some decisions will be passed, below are examples of decisions in the 2022 annual meeting: i Report on business results in 2022, business plan in 2023; ii Report on the operation of BOD in 2022; iii Report on the operation of the Audit Committee and its Independent members of BOD in the Audit Committee in 2022; iv Audited financial statements for 2022; v Profit distribution in 2022; vi Remuneration for BOD in 2023; vii Selecting an audit firm for the fiscal year 2023;
20 viii Continuing to implement the private placement plan approved by the 2022 annual general meeting; ix ESOP share issuance plan for employees in 2023 (Data taken from the Announcement of Meeting Minutes, Resolution of Annual General Meeting 2023)
SSI's management structure separates the two positions of Chairman of the Board of Directors,
Mr Nguyen Duy Hung, and CEO, Mr Nguyen Hong Nam On July 31, 2020, the Board of Directors of SSI Securities Corporation officially approved the appointment of Mr Nguyen Hong Nam as the CEO of SSI Securities Corporation Mr Nguyen Duy Hung continues to hold the position of Chairman of the Board of Directors and is directly in charge of the Development Strategy Subcommittee of the Company Mr Nguyen Hong Nam, born in 1967, has been a part of the development of the Vietnamese stock market for 20 years, playing a key role as one of the early founders along with Mr Nguyen Duy Hung - Chairman of the Board of Directors of SSI Securities Corporation - in establishing and developing the company This appointment aims to reassign responsibilities, with the Chairman of the Board of Directors focusing on long-term strategy development and the CEO directly managing operations, closely following the outlined strategy, and continuing to strengthen and affirm the position of the leading securities company in Vietnam.
Each position has different duties and responsibilities, but both have been leading SSI well in recent years This is reflected in the company's position and success in the market The appointment aims to reassign tasks, with the Chairman of the Board of Directors focusing on developing long-term strategies and the CEO directly managing operations, adhering to the proposed strategy, consolidating and affirming SSI's position as Vietnam's leading securities company Separating the positions of Chairman of the Board of Directors and CEO not only aims to standardize modern management models but also is expected to be a necessary change in the context of many challenges from today's business environment This will help SSI maintain stability and long-term growth, continue to implement operational strategies, and focus on promoting pioneering products, accompanied by advanced technology application in operations, bringing the best values to customers, shareholders, and employees In addition, the company is more transparent in disclosing the salaries and remuneration of members of the Executive Board and members of the Board of Directors.
More details about the director - Mr Nguyen Hong Nam, Mr Nam is a successful business manager in many fields of business He holds a Master of Science degree from the Lugansk National University of Technology and Economics in Ukraine As a talented person in business and finance, Mr Nam has held the position of CEO of SSI for many years and there has been no financial or business scandal during his tenure He has even contributed to bringing the company’s business results and position to new heights, leading the industry in recent years.
Currently, SSI Company has only 4 non-executive members, namely Mr Nguyen Quoc Cuong,
Mr Pham Viet Muon, Mr Nguyen Duy Khanh, and finally Mr Hironori Oka However, these individuals are only members and do not hold directorial positions within the company
According to SSI's charter, independent members of the Board of Directors, as stipulated in point b, clause 1, Article 137 of the Enterprise Law, must meet the following criteria and conditions:
22 a) Not currently working for the Company, its parent company, or its subsidiaries; not having been employed by the Company, its parent company, or its subsidiaries for at least 3 consecutive years prior; b) Not receiving salaries, remuneration from the company, except for allowances that the Board of Directors member is entitled to according to regulations; c) Not having a spouse, birth father, foster father, birth mother, foster mother, birth child, adopted child, biological sibling, or adopted sibling who is a major shareholder of the Company; not being a manager of the Company or its subsidiaries; d) Not directly or indirectly owning at least 01% of the total voting shares of the Company; e) Not having been a member of the Board of Directors of the Company for at least 5 consecutive years prior, except in cases of continuous reappointment for 02 terms.
2.4.1.5 Independent Committee of the Board
In 2022, the SSI Board of Directors (BOD) had 06 members, including two independent members, Mr Ngo Van Diem (whose term as a BOD member ended on May 07, 2022), Mr. Nguyen Quoc Cuong (appointed as an independent BOD member since May 07, 2022), and Mr. Pham Viet Muon The current BOD structure is balanced and suitable among members with experience, knowledge, and understanding of management, law, finance, and securities, as well as the roles and responsibilities of these members (executive members, non-executive members, and independent members) It complies with the regulation that at least 1/3 of the BOD members must be independent and non-executive members to ensure independence and objectivity in the Board's operations.
Mr Ngo Van Diem currently holds 218,550 shares, accounting for 0.015% of the company, and is a former head of the SSI audit committee Additionally, Mr Pham Viet Muon succeeded as the head of the audit committee, holding 292,798 shares, accounting for 0.02% of the company.
In addition, the auditing unit for SSI is an independent organization - Ernst & Young VietnamLimited Liability Company is the auditing company for SSI, with Mr Nguyen Xuan Hung as the head of auditing Hiring a separate auditing company demonstrates the independence between the two auditing parties and the company This also brings transparency, clarity, credibility, and honesty to the financial results that the company publishes to the market.
2.4.2 The Size and Structure of a Board of Directors
SSI is a company with a large board of directors compared to other companies in the same industry However, this does not dilute the management of the company Each management department in the company fully performs its duties Having a large board of directors can provide more resources for monitoring and management This also contributes to allowing the board of directors to have a higher level of specialization through diversification of experience. Each member of SSI’s board of directors is an experienced person with a solid tenure in the industry This is also one of the factors that contribute to SSI’s success.
The company has become more gender-diverse, with more female directors and managers than other companies in the same industry This shows that the company has recognized the importance of equal distribution of management talent between men and women According to many studies, women on the board of directors demonstrate higher levels of trust and cooperation than men Additionally, they can evaluate information and consider risks differently from men, which can improve decision-making More importantly, it promotes gender equality in society However, the company still faces issues with diversity on the board of directors, and it needs to consider adding more diverse management personnel This can also help in management because diversity can help the board of directors overcome groupthink, where directors reach a consensus too quickly due to social similarities forming their perceptions and decision-making Diversity can also encourage healthy debate by making directors more likely to challenge each other’s views without being concerned about maintaining harmony due to social similarities in a society.
The SSI charter stipulates the rights and obligations of shareholders Some notable provisions are as follows: According to Article 17, shareholders have the right to attend and speak at shareholder meetings and to exercise their voting rights directly or through authorized representatives, or by other means as prescribed by law or the Company’s charter In addition, shareholders have the right to review, search, and extract information from the list of shareholders, vote, and request correction of inaccurate information Along with that is the right to review and extract minutes and resolutions of the Board of Directors, financial reports between years and annually according to the form of the Vietnamese accounting system, and reports of the Audit Committee In particular, shareholders also have the right to request a general meeting of shareholders to be convened in certain cases specified in the charter.
From the above, it is clear that the charter sets out to ensure that shareholders do not feel unfairly treated when participating in the purchase of company shares It creates a balance of power between shareholders and the board of directors The above provisions also help shareholders trust the company more.
SSI’s human resource development strategy focuses on building a well-trained workforce with good professional qualifications and high adaptability to continuous changes in the business environment The company believes that the human resources team is the most valuable asset and one of the important growth drivers of the enterprise, helping to improve product quality, services, and customer satisfaction, and maximize value for shareholders.Along with policies to attract talent in the finance industry, SSI also develops a team of excellent experts in key areas SSI always strives to create a transparent and open working environment that nurtures talent, encourages innovation, and provides commensurate remuneration In recent years, the company’s board of directors and human resource management team have regularly carried out talent recruitment activities SSI believes that attracting new personnel with good educational backgrounds and experience from reputable organizations in Vietnam and abroad, combined with linking mature personnel from SSI, will create superior strength to implement and realize the company’s development strategies through each period In recent years, SSI’s staff has always been a professional organization with high professionalism, ranking first among domestic industry groups.
+ Strategic planning, and organizing work:
Executive compensation and Ownership structures
Executive compensation and Ownership Structures
About SSI’s current policies, salaries, and bonuses, it can be seen that the company has placed a great emphasis on employee and management compensation Efficiency is the principle in business and management, and SSI operates a system of policies revolving around the organization’s overall effectiveness Employee benefits, welfare, and promotion opportunities are linked to individual capacity, performance, and contributions to the overall effectiveness of the department and the company, ensuring equal opportunities for all personnel regardless of gender or region SSI places great emphasis on building and implementing a salary payment policy based on the 3P model (Position - Position; Person - Human; Performance - Job efficiency) The 3P salary payment method overcomes the disadvantages of traditional salary payment methods such as overemphasis on qualifications or seniority, inability to distinguish between individual job performance and contributions to realizing corporate goals With this method, SSI can:
Pay salaries commensurate with each position’s contribution to the business, creating
▶ competitiveness compared to the market of the same group of functions;
Attract and retain talented employees by creating motivation through implementing fairness
▶ when paying salaries commensurate with their abilities;
Encourage improving work efficiency by paying salaries commensurate with employees’
▶ contributions to the overall results of the business.
SSI provides good welfare policies for each employee and manager in the company These policies include a 13th-month salary, benefits for holidays and festivals throughout the year, seniority bonuses, as well as allowances for phone usage, work expenses, travel expenses, uniforms; and travel insurance for those who frequently travel abroad for work Along with maintaining fair and competitive salary policies on the market, in 2022, SSI successfully issued
10 million stock options for employees (ESOP) to align employee interests with SSI; and attract, retain, and promote long-term committed and capable personnel In addition, SSI always prioritizes the health of its employees, which is even more evident during the Covid-19 pandemic A series of action programs have been implemented to protect the safety and health of employees Since the beginning of the pandemic season in 2020, the company has worked with insurance consulting units to review the rights of employees and their relatives under supplementary health and accident insurance programs in case of risks To prioritize employee health during the peak period of COVID-19 prevention and control, SSI quickly issued a policy to fully pay salaries to employees who cannot perform their jobs due to COVID-19 infection or are required to be isolated In addition, 100% of SSI personnel are arranged to be vaccinated promptly according to programs implemented for personnel of essential businesses or vaccination programs by region.
SSI has also been promoting media information to make it easier for employees to access and be responsible for self-monitoring and evaluating signs of virus infection; self-care for themselves and their families in case of infection; notifying the HR department of their health status and that of their relatives to take appropriate measures and seek advice from specialized medical units Stepping through the COVID-19 pandemic, SSI has successfully maintained continuous business operations while maintaining comprehensive welfare policies for employees, ensuring the safety of employees’ health, and maintaining stability in the lives of each member and family In addition to financial benefits, what SSI values more than anything else is accompanying, sharing, and supporting each employee in all aspects of life The human resource management policies and activities last year further reinforced the distinctive features of the corporate culture, building trust among employees, thereby increasing solidarity, professionalism, and enthusiasm in the work of each SSI member, creating harmony, unity, and team spirit imbued with SSI’s identity.
In addition, other benefits are stipulated in the company’s internal regulations that only apply to the Chairman of the Board of Directors executive members, and Board members who participate in the company’s work Other Board members are only entitled to work-related expenses (if any)
Figure 10: Remuneration Table for Board of Directors (Source: 2022 Annual Report)
3.1.2 Analysis of the firm’s ownership structures; Analysis of the firm’s Executive Equity Ownership
In the company’s total ownership structure, foreign ownership accounts for a fairly large proportion, reaching 33.68% This shows that the company has a high level of international involvement Domestic ownership accounts for 66.19%, of which there is no state ownership,implying that the company may not be dependent on government decisions Large shareholders account for 21.86%, of which 6.32% are domestically owned and 15.54% are foreign-owned,indicating the company’s international growth and the level of interest from foreign investors.Specifically, this 15.54% belongs to Mr Hironori Oka of Daiwa Securities Group Inc with several shares of 231,737,895, and 6.32% domestically owned by Mr Nguyen Duy Hung ofNDN Investment Company Limited with a total number of shares of 94,237,688 From this, we can see the diversity in the company’s share ownership, which may affect strategic decision- making and management The ownership of Daiwa Securities Group Inc may indicate a link to the international financial market, which can enhance investment funds and networking benefits.Although high foreign shareholder ratios may bring great opportunities, they also create risks associated with fluctuations in international markets.
In summary, the company has a strong connection to the international market through foreign investor stock ownership This could provide significant opportunities for growth and expansion but also implies facing risks and impacts from global market fluctuations This needs to be carefully considered in the company’s future strategic planning and development.
Figure 11-12: Shareholding Ratio and Number of Shares According to Shareholder List (Source: 2022 Annual Report)
Figure 13-14-15: SSI Stock Trading Information of Insiders and Affiliated Persons (Source:
According to the resolution No 01/2021/NQ-ĐHĐCĐ dated May 22, 2021, of the General Meeting of Shareholders, SSI implemented an Employee Stock Ownership Plan (ESOP) to align the interests of employees and the company; attract, retain, and promote a long-term leadership team and staff with dedication and loyalty to the company The ESOP 2021 issuance was completed on February 23, 2022 Within the framework of the program, the members of the Board of Directors purchased ESOP shares as follows:
Figure 16: ( Source: 2022 Financial Statement of SSI Securities Corporation )
At present, we can see that a significant proportion of the shareholding in the majority company is held by members of the Board of Directors Having such a substantial stake also implies that these individuals will have a stronger commitment and a more solid connection to the interests of the entire company.
The board has identified and managed significant risks In 2022, major global events such as the Russia-Ukraine war, increased inflation and interest rates, along with a series of domestic events, strongly affected the Vietnam stock market The market experienced systemic fluctuations (the VN-Index dropped from the peak of 1,536.45 points to 873.78 points, representing a decrease of about 43%), as well as individual fluctuations in some specific businesses (some stocks saw price drops of 70% - 80% and a loss of liquidity in many trading sessions), pushing the credit risks of margin trading to an alarming level However, with a strong team alongside clear strategies from the Leadership Board, the company promptly adjusted policies and implemented flexible solutions within the framework As a result, 2022 continued to witness outstanding growth for SSI in terms of new customer numbers, and risks continued to be minimized at the lowest level, always staying below the approved risk threshold by the Board of Directors, especially with no bad debts arising from margin trading activities.The specific activities carried out were as follows:
- During the initial months of 2022, when the margin trading loan balance increased significantly and remained high, accompanied by factors that could pose market risks such as rising interest rates, the Leadership Board discussed and proactively adjusted margin trading loan activities more cautiously This was aimed at minimizing credit risks during market fluctuations, as well as maintaining the stability of product policies.
- During the market crisis periods caused by widespread forced selling activities regardless of the quality of stocks, which occurred in November 2022, accompanied by numerous stocks experiencing high-volume floor selling and illiquidity, the Leadership Board continuously discussed and evaluated the situation to come up with flexible solutions within the framework to ensure SSI's safety and the best possible support for customers.
During operations, the management board also identified underlying risks, such as market risk, credit risk, liquidity risk, and system and information security risk Once identified, the management board implemented timely and practical risk prevention measures to avoid undesirable consequences.
Furthermore, the SSI management recognized that ensuring integrity and ethics in business is of utmost importance Therefore, SSI has issued Policies and anti-corruption practices The anti- corruption provisions are also mandatory in all contracts for the purchase of goods, services, and service provision contracts of the Company with suppliers Additionally, from the time of joining the Company, each employee is briefed and committed to complying with the Code of Conduct along with other internal regulations of SSI The company focuses on enhancing the compliance awareness of each individual by enhancing regular training and building E-Learning training software to ensure that each individual can quickly access, understand, and comply with the Code of Conduct.
From members of the Board of Directors, the CEO Board, the Leadership Board, and management officers to employees, all must comply strictly, and compliance monitoring is conducted regularly through periodic checks by the Internal Control Department (ICD) Brokers
CONCLUSION AND PROPOSAL FOR IMPROVING THE
In recent years, it can be seen that the global economic, financial, and political markets have been constantly fluctuating Many events have had a significant impact on Vietnam's economy. SSI has not been immune to the adverse effects of the business environment; however, through its adaptability to external conditions and steadfast commitment to its core principles, the company has achieved impressive results compared to other companies in the same industry. The gross revenue in 2022 reached nearly 6,517 billion VND, and the consolidated pre-tax profit was 2,110 billion VND, representing a decrease of 16% and 37% respectively compared to the previous year The company continues to be among the "Enterprises Contributing the Most to the State Budget" with a sum of 1,586 billion VND With a focus on rigorous risk management and transparency across all areas of operation, throughout 2022, SSI has
40 maintained ample liquidity for all core business activities, providing strong support for investment needs for its clients and avoiding any non-performing debts These results were positively contributed by all business segments: Securities Services, Investments, Capital Resources and Financial Business, Investment Banking Services, and Fund Management The year 2022 set the foundation for SSI's transformation process, aiming to increase value for investors by adopting an asset-based approach The Asset Management Services division was established to provide a diverse range of financial services based on an analysis of demand and risk appetite, offering tailored advice and optimizing assets suitable for different customer segments and profiles
Contributing to the success of the company in recent years, one cannot overlook the effective management style of the Board of Directors and the Executive Board of the company The company's board consists of individuals with ample talent and knowledge to lead the company through difficulties and challenges The SSI management board recognizes that the human factor is what leads to the company's success Therefore, the company always emphasizes the recruitment of talented individuals, those with good education and experience to support the company Along with this are fair salary and reward policies for each individual in the company, creating motivation for each person in the collective to work more effectively and productively.
Furthermore, the allocation and establishment of councils, boards, and groups for collaboration in the company's management process also demonstrate that the SSI management board attaches great importance to the effectiveness of the company's management and financial efficiency In return for the efforts of the board of directors, employees, and managers in the company, in the past year, SSI has achieved numerous successes, received many awards, and has become a leading company with significant influence in Vietnam's economy and finance.
However, in the company's management, there is still room for improvement The company should have a department where individuals play supervisory roles, such as observers or advisory directors Their observations and supervisory decisions will contribute significantly to the decision-making process for internal shareholders and external stakeholders Especially for external stakeholders, as they can provide neutral and impartial monitoring arguments and results Additionally, the company still lacks independent directors on the independent board of directors Having independent directors can ensure a more objective decision-making process for the company Alongside this, the company should also consider appointing professionals such as bankers, financial experts, politically connected individuals, and employees. Supplementing such departments will help diversify the management approach and enhance the overall quality of the company's governance With these improvements, the company can enhance its management efficiency, leading to greater success in the future.
Law on Securities 26th November 2019
Law on Enterprises dated 17th June 2020
Disclosing Meeting Minutes, Resolution of the AGM 2023 and other relevant documents Supplement to clarify the content of Corporate Governance Annual Report in 2022