SSC wants auditors to show up at GMS

Auditors will help enhance transparency in the operations of public companies.

The State Securities Commission (SSC) is collecting feedback on a new draft circular that requires auditors to attend general meetings (GM) of big-sized public companies to help shareholders better understand those companies’ performance.

As per the forthcoming requirement, auditors will help enhance transparency in the operations of public companies by explaining to shareholders all those details that are not properly disclosed in financial reports, said an official at SSC.

This is a new issue which has not yet been mentioned earlier, said Bui Hoang Hai, deputy head of the listing division at SSC. Under the draft circular, a big-sized public firm must have paid-in capital of at least VND120 billion and the number of shareholders at no fewer than 300.

Hai said many foreign experts had insisted that auditors’ presence at general meetings was important and suggested that SSC apply the regulation to all public firms, not only big-sized ones as provided for in the draft circular.

However, Vietnam currently has some 1,600 public firms that usually hold general meetings during March to May annually, while the number of auditors in Vietnam is limited so it will be unrealistic to ask auditors to be present at all meetings during a short span of time, Hai said.

Therefore, for the time being, SSC considers applying the regulation to only big-sized public companies, he said.

A new requirement is that the forthcoming circular will take under its jurisdiction all public companies rather than listed firms only like the current practice. The circular will be issued soon and is expected to take effect in early July, Hai added.

The draft circular also sets more stringent requirements regarding transparency at public companies, including information on incomes, resumes and relationships of board members and management staff.

“At this time, board members of many companies receive and report benefits from a certain parent company but are not required to report incomes from the company’s subsidiaries. Those details must be disclosed under the new circular,” Hai added.

The draft circular is among attempts of the authority to boost transparency in corporate governance, Hai said, adding that to do the job, SSC also needs help from institutional investors in Vietnam.

“We hope institutional investors can sit together and agree to invest in only those companies that have or commit to have good corporate governance,” Hai said.

The draft circular says corporate governance involves a set of regulations ensuring that a company be oriented and supervised effectively for the benefit of shareholders and other related partners of the company. – SGT

Tags: SSC, vietnam stock, Vietnam stock market, VNindex