Rules on board members need fine tuning

Thursday, Jun 20, 2013 10:20

HA NOI (Biz Hub)— As practices showed that public companies this year could not meet the standard of one third of the managing board being independent members, the State Securities Commission would propose the Ministry of Finance to postpone the implementation of this regulation, said its chairman Vu Bang.

The regulation of independent board members was referred to in Circular 121/2012/TT-BTC on public company management, with effect from September 17 this year.

However, many enterprises said it would not be easy to select a third to be independent board members, especially in companies where small shareholders prevail.

When building the circular, the commission wanted the structure of the managing board in public companies to be balanced with a force to increase professional operation and limit the abuse of power by the major shareholders.

However, the number of around 1,000 enterprises listed on the HCM City and Ha Noi stock exchanges and the unlisted public company market will need at least 2,000 people to fill in the management boards if the provisions of Circular 121 are applied.

If including public firms which are not trading shares on these three markets, the demand for personnel will mount by several times.

The awareness of the rights of shareholders is low. Because small shareholders account for the major part in most of public companies, and the understanding of law is limited.

Meanwhile, the managing boards of listed businesses have been unprofessional, proven by the way they organise shareholder meetings.

Many companies had to hold the meeting for the second or third time, as the number of shareholders attending was too small and shareholders did not vote due to disputes with the board.

But the reason the companies stated for the difficulty in implementing the regulation was that the benefits of independent board members were not associated with the companies, there would not be many votes for them. — VNS

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