Context: Listed-company governance is being tightened not because lawmakers enjoy adding procedures, but because it is one of the infrastructure conditions for Vietnam’s stock-market upgrade — a foreign investor buying a share is also buying the quality of governance behind that share.
Legal Grounds to Establish First
The current governance framework for public and listed companies comprises the Securities Law 54/2019/QH14 (amended by Law 56/2024/QH15), the Enterprise Law 59/2020/QH14, Decree 155/2020/ND-CP guiding the Securities Law and Circular 116/2020/TT-BTC on corporate governance. Core requirements under close supervision: the board of a public company must include independent members at the statutory ratio and separate the chair and chief-executive roles at listed companies per the prescribed roadmap; internal audit is a mandatory function for listed companies under the internal-audit framework of Decree 05/2019/ND-CP; and a board-level audit committee gradually replaces the traditional supervisory board in companies adopting the new governance model.
The most sanctioned area is not structure but disclosure: late disclosure, incomplete disclosure of related-party transactions, and managers trading shares without proper reports. Managers’ responsibility is therefore distinctly personal in the new frame: board members and executives can face administrative fines in the securities field, be forced to correct information, and where management-duty breaches cause loss, must compensate the company and shareholders under the Enterprise Law. English-language disclosure for large-cap listed companies is being encouraged and gradually standardised alongside the market-upgrade process, but at the time of writing companies must distinguish clearly what is mandatory duty and what is emerging good practice.
From Rule to Practice
The most common governance breach at newly listed companies is treating disclosure as the investor-relations department’s job, while the law places it as a managers’ duty. An annual disclosure calendar owned by named responsible members, plus a pre-signing approval process for related-party transactions, prevents most of the repeat violation records seen on the market.
Turning Analysis into Action
The steps below turn the analysis above into concrete work:
- First, test your own situation against this ground: The current governance framework for public and listed companies comprises the Securities Law 54/2019/QH14 (amended by Law 56/2024/QH15), the Enterprise Law 59/2020/QH14, Decree 155/2020/ND-CP guiding the Securities Law and Circular 116/2020/TT-BTC on corporate governance.
- Record the application point specific to this case instead of copying conclusions from another case: The most sanctioned area is not structure but disclosure: late disclosure, incomplete disclosure of related-party transactions, and managers trading shares without proper reports.
- Prepare the evidence and file relating to the following point before dealing with authorities or partners: The most common governance breach at newly listed companies is treating disclosure as the investor-relations department’s job, while the law places it as a managers’ duty. An annual disclosure calendar owned by named responsible members, plus a pre-signing approval process for related-party transactions, prevents most of the repeat violation records seen on the market.
- Answer the question clients ask most directly with this conclusion, and keep it on file: A public company must have independent board members at the statutory ratio under Decree 155/2020/ND-CP and Circular 116/2020/TT-BTC, with stricter requirements for listed companies. The exact percentage must be checked by company type and size at the time of application — and ‘independent in name only’ members are the point institutional investors probe hardest.
Frequently Asked Questions
What ratio of independent board members is required?
A public company must have independent board members at the statutory ratio under Decree 155/2020/ND-CP and Circular 116/2020/TT-BTC, with stricter requirements for listed companies. The exact percentage must be checked by company type and size at the time of application — and ‘independent in name only’ members are the point institutional investors probe hardest.
Is internal audit mandatory?
Yes for listed companies: the internal-audit function is mandatory under the Decree 05/2019/ND-CP framework, operating independently of management and reporting to the board or audit committee. A company that sets up the unit on paper only, without real audit plans and reports, is exposed at the first governance inspection.
Is English disclosure required?
It is moving in the direction of encouragement and gradual standardisation for large listed companies alongside market upgrade; at the time of writing, companies must separate current mandatory duties from emerging practice to avoid both under-compliance and over-promising investors. Many large companies already disclose bilingually voluntarily as a capital-competition advantage.
What is the liability of company managers?
Managers bear personal responsibility on three tiers: administrative fines in the securities field for disclosure or unreported-trading breaches, compensation liability to the company and shareholders for management-duty breaches causing loss under the Enterprise Law, and criminal liability for serious acts such as manipulation or deceiving investors.
This article has been quality-reviewed by the FLAW AI Legal Council