BA213IU Ms Ngoc Anh

FIVE ELEMENTS OF
CORPORATE GOVERNANCE
The five key elements of
good corporate governance

Protection of (minority)
Good board practices

Appropriate control

shareowner rights
environment and

Strong regime of
disclosure and
transparency
processes
LECTURE 4
DISCLOSURE AND TRANSPARENCY
Lecturer: Phan Ngoc Anh, MBA.

Strong commitment to corporate governance reforms

CONTENT WHAT IS DISCLOSURE?

 OECD Principles: disclosure and transparency
 Benefits of disclosures, transparency
 Financial, non-financial information disclosures
 Insider trading
 Related party transactions
 Ensuring access to information for all interested
parties, regardless of the purpose of obtaining
the information, through a transparent
procedure that guarantees information is easily
found and obtained.

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BA213IU Ms Ngoc Anh

DISCLOSURE VS TRANSPARENCY OECD PRINCIPLES: DISCLOSURE

AND TRANSPARENCY
 Discussion question 1:
“Timely and accurate disclosure should be made
Does disclosure also mean on all material matters regarding the
transparency? corporation, including the financial situation,
performance, ownership, and governance of
the company.”

OECD PRINCIPLES: DISCLOSURE BENEFITS OF DISCLOSURE

AND TRANSPARENCY AND TRANSPARENCY
“Timely and accurate disclosure should be made  Discussion question 2:
on all material matters regarding the
Why would boards want or need to
corporation, including the financial situation,
performance, ownership, and governance of disclose information to
the company.” shareholders/stakeholders?

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BA213IU Ms Ngoc Anh

WHY DISCLOSE? WHO ARE THE INTERESTED

PARTIES?
 Mandatory requirements (Circular 155/2015/TT-
BTC)  Financial institutions
 Accounting standards  Investors – share owners
 Enterprise Law  Potential investors
 Stock Exchange Listing Requirements  Customers
 Suppliers
 Decree 71/ 2017 on Corporate Governance
 Employees
 Government, regulators
 Joint ventures / partnerships

CHANNELS OF DISCLOSURE BENEFITS OF DISCLOSURE,

TRANSPARENCY
Annual reports and published accounts
 Information and marketing tool to help attract For informed
For companies
potential investors parties
Annual general meeting Increased access to Make informed
 Evaluate company’s situation
external capital investment decisions
 Answer questions and discuss results with shareholders Lower cost of capital Detect wrongdoing
 Provide explanation of proposals put before the Improved operational Enhance
meeting (e.g. proposed dividends, dividend policy) performance accountability for
Reduced risk of business decisions
Company’s website
corporate crises, Improve efficiencies
 Simple and inexpensive
scandals and competitiveness
 Information not audited
Enhanced trust

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BA213IU Ms Ngoc Anh

ACCOUNTABILITY THROUGH WHAT INFORMATION

DISCLOSURE SHOULD BE DISCLOSED?
2 types: financial and non-financial
Financial
Financial and operating results of the company
Helping investors:
Competitors using Balance sheet
leading to a lower
the information Income statement
cost of capital
Cash flow statement
BAD GOOD
Notes to the financial statements

WHAT INFORMATION OECD DISCLOSURE

SHOULD BE DISCLOSED? OBLIGATIONS
Non-financial  Financial and operating results
Company objectives  Company objectives

Major share ownership, voting rights
Directors’ and key executives’ evaluation,
remuneration
Material foreseeable risk factors
Corporate responsibility
Control environment
Material issues
Governance structures, policies
 Major share ownership and voting rights
 Remuneration policy for board members, key executives
 Information about board members, including their
qualifications, the selection process, other company
directorships and whether they are regarded as
independent by the board
 Related-party transactions
 Foreseeable risk factors
 Issues regarding employees, other stakeholders
 Governance structures, policies

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BA213IU Ms Ngoc Anh

INSIDER TRADING Activity: Explore Disclosure Barriers

Where company securities are bought or sold What information is not and should not be
based on information that is not publicly disclosed?
available
Why?
Board should introduce measures to prevent
 Timing?
insider trading
 Nature?
Illegal in most countries; tolerated in some,
non-regulated in others

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