final report subject coporate governance and ethics for finance topic analyze and evaluate the quality of vingroups corporate governance

2.1.1 Efficiency of local capital markets 2.1.2 Extent to which the legal system provides protection to all shareholders 2.1.3 Enforcement of regulations 2.1.4 Societal and cultural va

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COLLEGE OF BUSINESS FACULTY OF FINANCIAL UEH

UNIVERSITY

FINAL REPORT SUBJECT: COPORATE GOVERNANCE AND ETHICS FOR FINANCE

TOPIC: Analyze and evaluate the quality of Vingroup's corporate governance

Student name:

Student code:

Class: FNC07 — K47 Course: 23C1 FINS0510404 Email:

Introduce about the ¢ + a

11 History of formation and development:

1.2 Achievements of the company

Corporate Governance Analysis

2.1 Analysis of factors that shape the quality of governance system in Vietnam

2.1.1 Efficiency of local capital markets

2.1.2 Extent to which the legal system provides protection to all shareholders

2.1.3 Enforcement of regulations

2.1.4 Societal and cultural values

2.2 Board of Directors: Duties and Liabilities

2.2.1 Organizational and Managerial Structure

2.2.2 The operations of the Board

2.2.3 Board Committees

2.3 Board of Directors: Selection, Compensation, and Removal

2.3.1 Market for directors

2.3.2 Director for compensation

2.4 Board of Directors: Structure and Consequences

2.4.1.5 Independent committees of the board

2.4.2 The size and structure of a board of directors

3.2 Executive Equity Ownership

Conclusion and recommendations

4.1 Conclusion

ABSTRACT

The purpose of this essay is to introduce and analyze a management system and the factors that affect its quality, using Vingroup Joint Stock Company as a case study The essay will begin by exploring the external business environment and how it shapes the management system, with the aim of preventing or deterring any self-interested actions

by the managers The essay will then introduce the Board of Directors and examine its composition, processes, and activities, as well as its roles and responsibilities The essay will also present and evaluate the Board of Directors, its sub-committees, and the internal audit department of the company The essay will conclude by assessing the effectiveness

of the management system at Vingroup Joint Stock Company and drawing implications This comprehensive analysis will improve our knowledge of management practices and help us gain insights into the current situation, as well as suggesting feasible solutions for improving the quality of management systems in Vietnamese businesses The following

is a brief introduction of Vingroup before I proceed with further research on its corporate governance mechanisms

1 Introduce about the company

1.1 History of formation and development:

Vingroup Group - Joint Stock Company (referred to as "Vingroup Group"), formerly Technocom Group, was established in Ukraine in 1993 by by an ambitious group of Vietnamese youth, initially producing instant noodles under the Mivina brand Vingroup, which started as Hon Tre Tourism, Trading and Service Development Investment Co., Ltd in 2001, is a diversified business group and an open ecosystem that operates in various sectors The group has established its name in real estate, commerce, tourism and consumer services such as retail, healthcare, education and high-tech agriculture Vingroup quickly expanded its portfolio and presence, opening the first modern shopping mall in Ho Chi Minh City in 2005, the first integrated resort

in Nha Trang in 2006, and another resort on Phu Quéc island in 2007 And in the same period, Vingroup was listed on the Ho Chi Minh Stock Exchange with code VIC (Vingroup, 2018) In 2010, Nestle acquired Technocom in Ukraine for $ 150 million and in the same year, the Vincom Center Dong Khoi project in Ho Chi Minh City was launched (Schroeder, 2010) In 2011, Vingroup entered the consumer services sector, launching Vincom Retail, Vinmec, and Vinschool, to provide high-quality shopping, healthcare, and education services to Vietnamese consumers In 2014, Vingroup ventured into agriculture, establishing VinEco, with a focus on organic and safe farming In 2017, Vingroup made a bold move into the automotive industry, launching VinFast, the first domestic car and motorcycle manufacturer in Vietnam In

2018, Vingroup joined the smartphone market, launching VSmart phones, produced

by VinSmart In the same year, Vingroup also became the promoter of the Formula | Grand Prix in Hanoi, which was later cancelled due to the COVID-19 pandemic Vingroup also opened the Landmark 81 tower in Ho Chi Minh City, the tallest completed building in Southeast Asia at the time In 2021, Vingroup announced its plan to invest $3.5 billion in developing semiconductor and software industries, aiming to become a global leader in technology and innovation From 2010 to the present, the company has continuously expanded its development in various fields with 48 subsidiaries (Vingroup, 2018) Vingroup's success will continue with a series

of projects on technology and real estate investment abroad, with the ambition to

bring a Vietnamese company to the international arena in the future After nearly 20 years of construction and development, Vingroup (formerly Vincom) from a charter capital of only a few hundred billion dong has now reached a market capitalization

of tens of billions of dollars, becoming a leading private enterprise in Vietnam

Vingroup, a leading Technology - Industry - Services group in the region, strives to create a better life for the Vietnamese people with its vision and mission The group adheres to its six core values: Credibility, Integrity, Creativity, Speed, Quality, and Humanity Vingroup constantly innovates and delivers high-quality products and services, enhancing the living standards of Vietnamese people and promoting Vietnamese brands globally

1.2 Achievements of the company

Vingroup is a leading conglomerate of Vietnam, with a vision to become a world- class technology, industry and service corporation Vingroup has been honored with many prestigious awards, both nationally and internationally, for its achievements and contributions in various fields Some of the awards are:

In 2023, Vingroup, VinFast, and Vinhomes won 5 gold medals at the FinanceAsia Awards, in the categories of Best Managed Company in Vietnam, Best Investor Relations in Vietnam, Best ESG in Vietnam, Best DEI (diversity, equity, and inclusion) in Vietnam, and Best Real Estate Company in Vietnam

In 2022, Vingroup was awarded the ‘Best Sustainable Finance Issuer’ by The Asset Triple A Country Awards, for its efforts to promote green and social bonds in the region

In 2021, Vingroup announced the VinFuture Prize, a global science and technology prize that pledges US$4.5 million annually to reward breakthrough scientific research and technological innovations that create positive change for humanity The prize is the largest annual prize in science and technology in Asia, and one of the largest in the world

In 2020, Vingroup awarded scholarships of nearly VND 40 billion to master’s and PhD candidates in science and technology, as part of its VinIF scholarship program The program aims to support and nurture young talents in the fields of science,

technology, engineering and mathematics (STEM), and to foster a culture of innovation and excellence in Vietnam

2 Corporate Governance Analysis

2.1 Analysis of factors that shape the quality of governance system in Vietnam

2.1.1 Efficiency of local capital markets

The prices of labor, natural resources, and capital are determined by the markets When capital markets are highly efficient, they are expected to reflect the information available accurately, so that transactions are based on well-informed decisions Accurate pricing is essential for corporations to make rational choices about how to allocate their capital to the most productive uses However, when capital markets are inefficient, prices can be distorted, leading to negative outcomes for corporate decision-making processes

Efficient capital markets have a dual function: they not only enable fair valuation of various assets, but also act as an effective tool for ensuring managerial discipline This is especially clear when efficient capital markets are carefully incorporated into compensation contracts When these contracts are properly designed, they align the incentives of managers with those of shareholders, and motivate corporate executives

to make decisions that are prudent and value-enhancing Through this alignment, efficient capital markets become a driving force behind fostering accountability and ensuring that management decisions are in line with the wider objectives of the organization

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an amazing trading session, VIC’s stock reached its trading limit at 75,600 VND per share with high trading volume, ranking 8th in terms of liquidity on the HOSE (Ho Chi Minh Stock Exchange) However, after this period of growth, VIC’s stock went through a steep correction, with the stock price falling to 46,500 VND per share, which is almost 40% lower than its peak Over the past year, VIC’s stock price has gone through various highs and lows, with a general downward trend

To sum up, VIC’s stock price has experienced many changes, mostly in a negative direction, in the last year

2.1.2 Extent to which the legal system provides protection to all shareholders

The legal framework plays a pivotal role in ensuring the effective protection of shareholder rights and the building of trust within the financial and managerial

systems of businesses This framework explicitly delineates the rights and responsibilities of shareholders, providing both a legal foundation for their ownership rights and voting power and a mechanism for ensuring transparency through the disclosure of vital information Furthermore, it mandates that business management operate in the best interests of all shareholders These legal protections are particularly relevant for major business owners, who are primarily concerned with safeguarding their assets from expropriation, and for minority shareholders, who are more focused on curbing potential abuses of power by controlling owners

The level of protection afforded by the legal system to The legal system can provide protection to shareholders by creating rules that prevent the abuse of voting rights, protect against unfair critical decisions, and enable shareholders to participate in management and voice their opinions This level of protection emphasizes fairness and prudence in corporate governance, enhancing shareholders’ confidence and promoting the long-term growth of the company

La Porta, Lopez-de-Silanes, Shleifer and Vishny (1998) show that the level of legal protection of shareholders affects the distribution of ownership: in countries where investors have weak legal protection, public companies tend to have big shareholders

A one-size-fits-all approach to shareholder protection simply won't work The legal framework must adapt to the unique tapestry of each nation and industry, requiring careful consideration and imaginative solutions to guarantee the highest level of investor security in corporate governance

2.1.3 Enforcement of regulations

Corporate governance is a system of institutions, policies, and laws that guide, manage, and oversee the activities of members to achieve the highest goals for businesses Each country in the world has its own legal system, and the State uses legal tools to make and enforce rules and regulations, including economic law Economic law in general or enterprise law in specific regulates issues related to the establishment, operation, and corporate governance of enterprises To achieve high efficiency in corporate governance, the legal system on enterprises needs to be improved, besides the internal subjective issues of enterprises Reality shows that the

application and enforcement of laws also have a strong impact on the success or failure

of corporate governance That is, the ability of state agencies to resolve disputes and protect the rights of shareholders and investors, which is best shown by the role of the Court and the enforcement agency Because in reality, there have been cases of long and expensive lawsuits due to the non-compliance with the Court’s decisions, the lack

of responsibility of the enforcement agency, or the inaction of the executor This is also part of the problem

Vietnam's vibrant securities market unfolds within a multifaceted web of legal frameworks, carefully designed to nurture investor confidence and ensure responsible operations At the heart lies the Securities Law of 2006, amended in 2010, the bedrock document outlining the regulations that govern every facet of the market From seasoned veterans to aspiring entrants, all market participants tread the path laid out by these regulations

Complementing this foundational law are Decree No 58/2012/ND-CP and Decree No 60/2015 These decrees zoom in on specific provisions of the Securities Law, providing detailed operational rules and practical guidance Imagine them as roadmaps, helping navigate the intricacies of specific areas like shareholder rights, disclosure requirements, and trading procedures

Securities companies, the engines that drive the market, operate under the watchful eye

of the Business Law of 2014 This law, along with a constellation of additional regulations and documents, defines the framework for their establishment and operation However, for these companies, the Securities Law of 2006 and its amendments remain the ultimate compass, ensuring responsible conduct and adherence to market principles

But the legal landscape doesn't exist as a monolithic entity Different segments of the securities business — brokerage, proprietary trading, underwriting, and investment advisory — each encounter a unique terrain of legal capital requirements Think of this

as a series of checkpoints, ensuring that each business segment possesses the financial muscle to fulfill its responsibilities and navigate potential risks

Furthermore, Vietnam has embraced a spirit of openness, raising the foreign ownership limit for securities companies from 49% to 100% in a pivotal move This opens the door for international expertise and capital, injecting fresh dynamism into the market and fostering a more globally integrated landscape

Thus, Vietnam's legal framework for securities offers a comprehensive and dynamic architecture From foundational laws to intricate decrees, from sector-specific requirements to evolving ownership landscapes, it provides a robust safeguard for investors and a fertile ground for responsible market growth As the nation's economic horizons expand, this legal ecosystem will undoubtedly continue to evolve, adapting to new challenges and opportunities while remaining committed to its core principles of fairness, transparency, and investor protection

In conclusion, protecting shareholders in corporate governance hinges on a rock-solid legal framework supported by teeth-gritting enforcement Clear guidelines, empowered shareholders, and accountable companies form the comerstones of trust, transparency, and fairness in the business world, paving the way for economic growth and stakeholder well-being

About Vingroup, as a prominent Vietnamese conglomerate, Vingroup navigates a complex legal landscape where compliance is not just a chore, but a cornerstone of its success and reputation Within Vietnam's evolving regulatory framework, Vingroup's commitment to legal compliance plays a crucial role in building trust among stakeholders This effectiveness hinges on three key factors: the quality of regulatory authorities, the transparency of legal proceedings, and Vingroup's own unwavering dedication to being a good corporate citizen In an environment where the legal landscape shifts constantly, Vingroup's ability to adapt and adhere to evolving regulations becomes all the more crucial Navigating this intricate terrain and consistently meeting legal requirements, not only fosters trust and transparency within the company, but also shapes Vingroup's future success in a dynamic legal environment

2.1.4 Societal and cultural values

Corporate governance isn't just about numbers and bottom lines; it's an influence of societal and cultural values that surround it The very fabric of the society a company operates in can shape its management's decisions, making actions acceptable in one setting raise eyebrows in another Imagine cultural dimensions like Hofstede's model

as invisible marionette strings, subtly pulling at how companies function and are perceived

Power Distance, for instance, dictates attitudes towards hierarchy, influencing how decisions are made and information flows Individualism versus Collectivism paints a picture of whether the company prioritizes individual achievements or the welfare of the group Masculinity's focus on competition can shape business practices, while Uncertainty Avoidance influences a company's tolerance for risk-taking Long-Term Orientation decides whether short-term gains or sustainable growth guide the ship, and Indulgence, well, let's just say it impacts how freely desires are pursued within the corporate walls

These cultural dimensions aren't mere labels; they're the invisible ink dictating how societies perceive authority, structure corporate governance, and ultimately, shape business practices Understanding these invisible strings becomes crucial for any company navigating the diverse of the globalized world

Vingroup, serves as a potent illustration of how societal and cultural values steer the compass of corporate governance Deeply embedded in the harmonious, respectful, and community-oriented fabric of Vietnamese culture, where societal well-being reigns supreme, Vingroup's actions echo this ethos

Their extensive Corporate Social Responsibility (CSR) initiatives, pouring resources into education, healthcare, and community development, reflect a clear understanding

of the cultural emphasis on societal welfare This commitment isn't mere window dressing; it's woven into the very fabric of Vingroup's operations

But Vingroup's story doesn't solely revolve around local values As a global player, they must navigate the tightrope of balancing Vietnamese cultural norms with international standards and expectations The company infuses Vietnamese cultural elements into its products and services, resonating with the local population, while

simultaneously prioritizing the well-being of both shareholders and the broader community This exemplifies the "collective interests" and "long-term relationships" that resonate deeply within Vietnamese culture

However, globalization beckons, demanding a delicate equilibrrum Vingroup must adapt to diverse societal and cultural values while adhering to internationally recognized corporate governance principles This balancing act, showcased by Vingroup's story, highlights the ever-evolving interplay between societal and cultural values, offering us a glimpse into the intricate dance between the Hofstede model and the nuances of stakeholder-centric and shareholder-centric approaches in the realm of corporate governance

2.2 Board of Directors: Duties and Liabilities

2.2.1 Organizational and Managerial Structure

Staying true to the spirit of Article 134b of the 2014 Enterprise Law, Vingroup (VIC) has built its organizational structure on two fundamental pillars: the annual general meeting (AGM) and the board of directors These play a crucial role in ensuring transparency, accountability, and responsible decision-making, all integral to Vingroup's success This two-pronged approach — the AGM holding ultimate authority and the board providing strategic guidance — creates a robust and balanced governance framework It fosters transparency and accountability, ensures responsible decision-making, and ultimately, lays the foundation for Vingroup's continued growth and success

The AGM stands as the ultimate voice of authority, where shareholders, the true owners, wield their power Within the confines of the company's Charter, Governance Regulations, and legal statutes, the AGM tackles critical decisions that chart Vingroup's course From electing the Board of Directors, the company's guiding compass, to approving vital resolutions on business strategy, finances, and other substantial matters, the AGM ensures shareholder voices are heard loud and clear But steering the ship requires expert hands This is where the Board of Directors steps

in Comprised of seasoned professionals, each bringing a wealth of experience in various business and financial sectors, the Board acts as the company's managerial

brain trust They craft and implement business strategies, oversee operations, and ensure Vingroup sails smoothly through the legal and practical landscapes

This delicate balance — the AGM guiding the big picture and the Board navigating the daily course — guarantees a robust and responsible governance framework It empowers shareholders, ensures transparency in decision-making, and safeguards Vingroup's future by adhering to legal requirements

Vingroup's governance structure is a well-oiled machine, adhering to the tried-and- true principles of traditional corporate governance This framework, rooted in Vietnamese law, ensures decisions are carefully deliberated and resolved by the AGM and Board of Directors, a partnership that fosters stability, safeguards shareholder interests, and lays the fertile ground for Vingroup's sustained growth

Corporate Structure of Vingroup

¢ Chairman of the Board: Mr Pham Nhat Vuong: A prominent Vietnamese businessman and the founder of Vingroup He has held the position of Chairman since 2011 and is a key figure in the company's history and continued success

e Ms Pham Thu Huong: She is the vice chairman of the board and the sister of Pham Nhat Vuong She manages the consumer retail segment of Vingroup, mcluding VinMart, VinPro, VinDS, and Adayroi

e Ms Pham Thuy Hang: Ms Hang has been Vice Chairman since 2010 and holds a degree in Russian Language She brings extensive experience in international relations and strategic partnerships to the Board

e Ms Neuyén Diéu Linh: Ms Linh has been a part of the Board since 2008 and is responsible for official information disclosure She holds degrees in languages and law and ensures transparency in Vingroup's communication

¢ Mr Nguyén Viét Quang: Elected to the Board in 2017, he took on the role of CEO

in 2018 He is responsible for Vingroup's day-to-day operations and plays a key role in driving the company's growth strategy

® Dy-Liacco Ibasco: He is a director of the board and the CEO of VinTech, the technology research and development group of Vingroup He joined VinTech in

2022, after leading the Al and robotics division at Google in the US

® Mr Adil Ahmad: He is a director of the board and the CEO of VinFast, the electric vehicle subsidiary of Vingroup He joined VinFast in 2021, after serving

as the chief digital officer of Tata Motors in India

® Michael Chin Jeawuk: He is a director of the board and the CEO of VinSmart, the mobile phone subsidiary of Vingroup He joined VinSmart in 2022, after working

as the head of global sales and marketing at Samsung Electronics in South Korea

® Ji Han Yoo: He is a director of the board and the CEO of VinBio, the biotechnology subsidiary of Vingroup He joined VinBio in 2023, after being a professor of molecular biology and genetics at Seoul National University in South Korea

This diverse and accomplished board embodies Vingroup's commitment to responsible governance The balance of leadership, experience, and expertise ensures the company

navigates the future with confidence, fulfilling its commitments to shareholders and stakeholders alike

2.2.2 The operations of the Board

Vingroup's Board of Directors operates under a principle of unwavering unity, as outlined in Article 2 of their Operational Regulations Each member, not merely a cog in the machine, shoulders the weight of individual responsibility while remaining accountable to the collective wisdom of the Shareholders’ General Meeting

Moreover, Vingroup's Board operates with a network of support Specialized committees and councils act as trusted advisors, lending their expertise to key decisions This collaborative approach ensures the Board never sails alone Importantly, the Chairman, like a skilled captain, guides and sets the course, but lacks the power to single-handedly overhaul the crew Their authority lies in steering, not replacing, the collective expertise that navigates Vingroup's journey

In conclusion, The Board of Directors at Vingroup isn't just a decision-making machine; it's the very engine driving the conglomerate's success They huddle regularly, not just to rubber-stamp proposals, but to dissect the business landscape, forge strategic pathways, and meticulously deliberate on every critical aspect of Vingroup's journey Each member, handpicked for their unique expertise and experience, brings invaluable insights to the table This collective brainpower isn't merely consulted; it's the very lifeblood that shapes Vingroup's future and fuels its relentless growth The result? A conglomerate that navigates the global business landscape with unwavering agility, leaving its mark on both industry and international markets Vingroup's position isn't merely "strong"; it's a testament to the visionary leadership and collaborative spirit embodied by its Board of Directors

2.2.3 Board Committees

In line with Vietnam's corporate governance framework, Vingroup's Board of Directors (BOD) prioritizes a streamlined structure This approach, compliant with Circular 116/2020/TTBTC and Government Decree 155/2020/ND-CP, empowers the BOD to function efficiently without compromising on expertise

Currently, apart from the essential Supervisory Board and Management Board, Vingroup operates with only one dedicated subcommittee: the Internal Audit Department This lean structure reflects a deliberate decision, guided by Vingroup's internal regulations (VIC) and the understanding that additional subcommittees may incur redundancy or hinder agility

The Internal Audit Department serves as a crucial cog in Vingroup's governance machinery, ensuring transparency and accountability Its dedicated team scrutinizes operations, identifies potential risks, and provides independent oversight, ultimately strengthening Vingroup's commitment to good corporate practices

This focus on efficiency, coupled with the presence of vital standing bodies like the Supervisory and Management Boards, underscores Vingroup's commitment to effective governance By leveraging the expertise of its board members and dedicated departments, Vingroup navigates the corporate landscape with agility and confidence, ensuring its continued success

2.3 Board of Directors: Selection, Compensation, and Removal

2.3.1 Market for directors

The "Market for Directors" hums with a competitive energy, where seasoned leaders and corporate governance gurus are courted to join the boards of ambitious companies This market thrives on the growing understanding that board members are the architects of success, guiding companies through strategic decisions, ensuring compliance, and ultimately shaping their long-term trajectory

For Vingroup, the Vietnamese powerhouse spanning real estate, hospitality, retail, and technology, the directorial market takes on a unique dimension Operating in a fiercely competitive landscape, Vingroup's continued national and international expansion hinges

on securing the perfect blend of expertise, experience, and strategic vision in its board members

Imagine Vingroup as a grand chessboard, its every move critical in the global game of business To navigate this complex landscape, the company seeks not just qualified pieces, but masters of the game Directors who understand the intricacies of Vingroup's