ASEAN Corporate Governance Scorecard Country Reports and Assessments 2015 Joint Initiative of the ASEAN Capital Markets Forum and the Asian Development Bank

Good corporate governance practices reduce vulnerability to financial crises, reinforce property rights, reduce the cost of capital, and lead to greater capital market development. In this fourth edition of the Association of Southeast Asian Nations (ASEAN) Corporate Governance initiative of the Asian Development Bank and the ASEAN Capital Markets Forum, over 500 top publicly listed companies from six ASEAN countries were assessed. In depth analysis of each country including rights of shareholders, equitable treatment of shareholders, role of stakeholders, disclosure and transparency, and responsibilities of the board are discussed.

About the Asian Development Bank ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to a large share of the world’s poor. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration.

Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.

ASEAN CORPORATE GOVERNANCE SCORECARD COUNTRY REPORTS AND ASSESSMENTS 2015 JOINT INITIATIVE OF THE ASEAN CAPITAL MARKETS FORUM AND THE ASIAN DEVELOPMENT BANK

ASIAN DEVELOPMENT BANK 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines ASIAN DEVELOPMENT BANK www.adb.org ASEAN CORPORATE GOVERNANCE SCORECARD COUNTRY REPORTS AND ASSESSMENTS 2015 Joint Initiative of the ASEAN Capital Markets Forum and the Asian Development Bank

ASIAN DEVELOPMENT BANK Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)

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ISBN 978-92-9257-929-6 (Print), 978-92-9257-930-2 (e-ISBN) Publication Stock No. TCS178983-2 DOI: http://dx.doi.org/10.22617/TCS178983-2

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Printed on recycled paper Contents

Tables and Figures vi

Abbreviations ix

Foreword x

1. Executive Summary 1 Background 1 Assessment Methodology 2 Level 1 3 Level 2 4 Total Score 5 Default Items 5 Peer Review Process 5 Overall Results and Analysis 6 ASEAN Corporate Governance Conference and Awards and Recognition of the Top ASEAN Publicly Listed Companies 11

2. Reports and Assessments 17 Indonesia 18 Background of the Corporate Governance Framework 18 Overall Analysis 19 Part A: Rights of Shareholders 22 Part B: Equitable Treatment of Shareholders 23 Part C: Role of Stakeholders 24

iii iv Contents

Part D: Disclosure and Transparency 25 Part E: Responsibilities of the Board 26 Bonus and Penalty 28 Conclusions and Recommendations 29 Malaysia 32 Background of the Corporate Governance Framework 32 Overall Analysis 34 Part A: Rights of Shareholders 37 Part B: Equitable Treatment of Shareholders 38 Part C: Role of Stakeholders 40 Part D: Disclosure and Transparency 41 Part E: Responsibilities of the Board 43 Bonus and Penalty 45 Conclusions and Recommendations 46 Philippines 49 Background of the Corporate Governance Framework 49 Overall Analysis 50 Part A: Rights of Shareholders 52 Part B: Equitable Treatment of Shareholders 53 Part C: Role of Stakeholders 54 Part D: Disclosure and Transparency 55 Part E: Responsibilities of the Board 56 Bonus and Penalty 57 Conclusions and Recommendations 58 Singapore 61 Background of the Corporate Governance Framework 61 Overall Analysis 62 Part A: Rights of Shareholders 65 Part B: Equitable Treatment of Shareholders 66 Part C: Role of Stakeholders 68 Part D: Disclosure and Transparency 69 Part E: Responsibilities of the Board 70 Contents v

Bonus and Penalty 71 Conclusions and Recommendations 72 Thailand 74 Background of the Corporate Governance Framework 74 Overall Analysis 75 Part A: Rights of Shareholders 78 Part B: Equitable Treatment of Shareholders 79 Part C: Role of Stakeholders 79 Part D: Disclosure and Transparency 81 Part E: Responsibilities of the Board 82 Bonus and Penalty 83 Conclusions and Recommendations 84 Viet Nam 88 Background of the Corporate Governance Framework 88 Overall Analysis 88 Part A: Rights of Shareholders 95 Part B: Equitable Treatment of Shareholders 96 Part C: Role of Stakeholders 97 Part D: Disclosure and Transparency 98 Part E: Responsibilities of the Board 100 Bonus and Penalty 100 Conclusions and Recommendations 101 Tables and Figures

TABLES

1 Comparison of Question Numbers and Scores in 2012, 2013, 2014 and 2015 3 2 Composition and Structure of Level 1 4 3 Composition and Structure of Level 2 5 4 Comparison of Total Scores, 2012–2015 7 5 Comparison of Level 1 Scores, 2012–2015 7 6 Comparison of Level 2 Scores, 2012–2015 8 7 Top 5 Publicly Listed Companies in ASEAN 13 8 Top 50 Publicly Listed Companies in ASEAN 13 9 Top 3 Publicly Listed Companies by Country 15 10 Top 2 Publicly Listed Companies with Outstanding Achievement by Country 15 11 Indonesia—Top 50 Publicly Listed Companies Based on 2015 Total Score 30 12 Malaysia—Average Corporate Governance Scores of Top 100 Publicly Listed Companies by Sector, 2013–2015 36 13 Malaysia—Distribution of Average Scores for Top 100 Publicly Listed Companies, 2013–2015 36 14 Malaysia—Top 50 PLCs (by rank) 48 15 Philippines—Top 50 Publicly Listed Companies based on 2015 Total Score 59 16 Singapore—ASEAN Corporate Governance Scorecard Total Score, 2014 and 2015 62 17 Singapore—Level 1 Scores, 2012–2015 64 18 Singapore—Top 50 Publicly Listed Companies Based on 2015 Total Score 73 19 Thailand—Overall Performance in 2014 and 2015 75 20 Thailand—Performance by Categories in 2014 and 2015 76 21 Thailand—Performance by Score Intervals in 2014 and 2015 76 22 Thailand—Performance by Industry Group in 2014 and 2015 77 23 Thailand—Performance by Market Capitalization in 2014 and 2015 77 24 Thailand—Top 50 Publicly Listed Companies based on 2015 Total Score 86 25 Viet Nam—Top 3 Publicly Listed Companies in the ASEAN Corporate Governance Scorecard based on 2015 Total Score 103 26 Viet Nam—Top 10 Publicly Listed Companies in the ASEAN Corporate Governance Scorecard based on 2015 Total Score 103

vi Tables and Figures vii

27 Viet Nam—Top 30 Publicly Listed Companies in the ASEAN Corporate Governance Scorecard based on 2015 Total Score 104 28 Viet Nam—List of All Publicly Listed Companies Being Reviewed in the ASEAN Corporate Governance Scorecard in 2015 105

FIGURES

1 Number of Publicly Listed Companies Assessed by Country, 2015 6 2 Distribution of Publicly Listed Companies based on Market Capitalization, 2015 7 3 Distribution of Total Scores 8 4 Mean Scores by Country 9 5 Level 1 Scores by Part 10 6 Distribution of Companies in the Top 50 by Country 11 7 Mean Scores per Part for the Top ASEAN Publicly Listed Companies 12 8 Process of Strengthening the Corporate Governance Framework in Indonesia 18 9 Indonesia—Corporate Governance Scores, 2012–2015 19 10 Indonesia—Weighted Corporate Governance Scores of Individual Parts of Level 1, 2012–2015 20 11 Indonesia—Corporate Governance Scores: Moving Forward to Higher Clusters, 2013–2015 20 12 Indonesia—Corporate Governance Scores for Highly Regulated Publicly Listed Companies against Others, 2015 21 13 Indonesia—Corporate Governance and Market Capitalization, 2015 22 14 Indonesia—Strengths and Areas for Improvement in Rights of Shareholders 23 15 Indonesia—Strengths and Areas for Improvement in Equitable Treatment of Shareholders 24 16 Indonesia—Strengths and Areas for Improvement in Role of Stakeholders 25 17 Indonesia—Strengths and Areas for Improvement in Disclosure and Transparency 26 18 Indonesia—Strengths and Areas for Improvement in Responsibilities of the Board 27 19 Indonesia—Net Bonus and Penalty Scores 28 20 Indonesia—Strengths and Areas for Improvement in Bonus and Penalty 29 21 Malaysia—Industry Distribution, 2015 34 22 Malaysia—Corporate Governance Scores of Top 100 Publicly Listed Companies, 2013–2015 35 23 Malaysia—Corporate Governance Scores of Top 100 Publicly Listed Companies by Band, 2013–2015 35 24 Malaysia—Exemplary Companies in Each Section 37 25 Malaysia—Strengths and Areas for Improvement in Rights of Shareholders 39 26 Malaysia—Strengths and Areas for Improvement in Equitable Treatment of Shareholders 40 27 Malaysia—Strengths and Areas for Improvement in Role of Stakeholders 41 28 Malaysia—Strengths and Areas for Improvement in Disclosure and Transparency 43 29 Malaysia—Strengths and Areas for Improvement in Responsibilities of the Board 45 30 Malaysia—Strengths and Areas for Improvement in Bonus and Penalty 46 31 Philippines—Profile of Top 100 Publicly Listed Companies by Market Capitalization 50 viii Tables and Figures

32 Philippines—Total Score Distribution, 2014 and 2015 51 33 Philippines—Average Scores of Top 100 Publicly Listed Companies by Market Capitalization Category 52 34 Philippines—Strengths and Areas for Improvement in Rights of Shareholders 53 35 Philippines—Strengths and Areas for Improvement in Equitable Treament of Shareholders 54 36 Philippines—Strengths and Areas for Improvement in Role of Stakeholders 55 37 Philippines—Strengths and Areas for Improvement in Disclosure and Transparency 56 38 Philippines—Strengths and Areas for Improvement in Responsibilities of the Board 57 39 Philippines—Strengths and Areas for Improvement in Bonus and Penalty 58 40 Singapore—Total Score Distribution, 2014 and 2015 63 41 Singapore—Total Score Distribution for 2015 64 42 Singapore—Scores of Individual Part of Level 1, 2013–2015 65 43 Singapore—Strengths and Areas for Improvement in Rights of Shareholders 66 44 Singapore—Strengths and Areas for Improvement in Equitable Treatment of Shareholders 67 45 Singapore—Strengths and Areas for Improvement in Role of Stakeholders 69 46 Singapore—Strengths and Areas for Improvement in Disclosure and Transparency 70 47 Singapore—Strengths and Areas for Improvement in Responsibilities of the Board 71 48 Thailand—Strengths and Areas for Improvement in Rights of Shareholders 78 49 Thailand—Strengths and Areas for Improvement in Equitable Treatment of Shareholders 79 50 Thailand—Strengths and Areas for Improvement in Role of Stakeholders 80 51 Thailand—Strengths and Areas for Improvement in Disclosure and Transparency 81 52 Thailand—Strengths and Areas for Improvement in Responsibilities of the Board 83 53 Thailand—Strengths and Areas for Improvement in Bonus and Penalty 84 54 Viet Nam—Corporate Governance Performance in Each Area, 2012–2015 89 55 Viet Nam—Distribution of Publicly Listed Companies in Each Score Scale 90 56 Viet Nam—Maximum, Mean, and Minimum Scores in Each Part 91 57 Viet Nam—Market-to-Book Ratio and Corporate Governance Scores 92 58 Viet Nam—Achieved Score in Each Part of Level 1 93 59 Viet Nam—Strengths and Areas for Improvements in Rights of Shareholders 95 60 Viet Nam—Strengths and Areas for Improvement in Equitable Treatment of Shareholders 96 61 Viet Nam—Strengths and Areas for Improvement in Role of Stakeholders 97 62 Viet Nam—Strengths and Areas for Improvement in Disclosure and Transparency 99 63 Viet Nam—Strengths and Areas for Improvement in Responsibilities of the Board 101 Abbreviations

ACGS ASEAN Corporate Governance Scorecard ACMF ASEAN Capital Markets Forum ADB Asian Development Bank AGM annual general meeting AR annual report ASEAN Association of Southeast Asian Nations BOC board of commissioners DRB domestic ranking body IIC Institutional Investor Council MCII Malaysian Code for Institutional Investors OECD Organisation for Economic Co-operation and Development OJK Otoritas Jasa Keuangan (Financial Services Authority, Indonesia) PLC publicly listed company RPT related party transaction SEC Securities and Exchange Commission (Philippines) SGX Singapore Exchange SOE state-owned enterprise

ix Foreword

Teresita J. Herbosa, Chair, ASEAN Corporate Governance Taskforce

The Philippine Securities and Exchange Commission (SEC) takes pride in taking an active role in the Association of Southeast Asian Nations (ASEAN) Corporate Governance initiative, which is comprises the ASEAN Corporate Governance Scorecard (ACGS) and the ranking of corporate governance performance of ASEAN publicly listed companies (PLCs). For the past 5 years, this regional initiative of the ASEAN Capital Markets Forum (ACMF) was under the highly competent leadership of the Securities Commission Malaysia. As it enters its sixth year, it is a great honor and privilege for the Philippine SEC to take over and undertake the challenge of further developing this initiative and focusing more on corporate governance in the ASEAN region. This would not be possible without the support of our fellow regulators, particularly the Indonesia Financial Services Authority, Monetary Authority of Singapore, Securities Commission Malaysia, Thailand Securities and Exchange Commission, and the Viet Nam State Securities Commission. It is further made possible by the technical assistance of the Asian Development Bank, which has supported this initiative from its inception.

The steady improvement in the corporate governance scores of PLCs from participating countries shows the success of this initiative. More than that, it shows the willingness and drive of ASEAN PLCs to improve their corporate governance standards and practices to reach a level at par with their global counterparts. This is instrumental moving on to the next phase of this initiative. Counting also on the commitment and support of fellow regulators, the ACGS objectives of raising corporate governance standards of ASEAN PLCs, giving greater international visibility to well-governed ASEAN PLCs, and promoting ASEAN as an asset class will continuously be achieved moving forward.

In the last 5 years, the ACGS has become a well-recognized tool for measuring ASEAN corporate governance. This recognition is made possible by the collaboration and cooperation of the capital market regulators and the domestic ranking bodies of each participating country, who have exerted effort to create awareness of the ACGS and of the value of good corporate governance. The culmination of this collaboration and cooperation is the Annual Corporate Governance Awards to recognize the top 50 ASEAN PLCs, which was held in Manila, Philippines, on 14 November 2015. This inaugural event highlighted and gave due recognition to the significantly improved performance of the top ASEAN PLCs and showcased their openness and willingness to adopt internationally recognized best practices.

The ACGS has achieved what it has set out to accomplish. However, there is still much to be done. In light of the Group of Twenty/Organisation for Economic Co-operation and Development (G20/ OECD) Principles of Corporate Governance and to give further consideration to the idiosyncrasies x Foreword xi

of ASEAN member states, it is the right time for a holistic review of the ACGS and its methodology. Although it has served its purpose of raising the standards of the region’s PLCs, enhancements may still be made that will not only further improve the corporate governance standards in ASEAN, but would also further promote ASEAN as an asset class. Continuing the momentum of the ACGS entails not only firm cooperation among regulators and domestic ranking bodies but the buy-in of all PLCs and investors. Moving forward, ASEAN PLCs should also look at adopting an approach that focuses on investors, who are the fuel that keeps the engine of economies moving. Further, validation of the ACGS results is a key priority to further ensure the sustainability, continued acceptance, and increased international recognition of the ACGS.

Progressing to the next phase of the ACGS, it is hoped that the number of participating countries will increase to include all ASEAN member states to make the new ACGS truly reflective of the ASEAN region. Consequently, it is envisioned that all ASEAN PLCs will subscribe to and embed in their corporate cultures, the best corporate governance standards and practices. Hence, as we find ourselves at the crossroad of determining the future of ASEAN corporate governance, the full and steadfast commitment and wholehearted effort of all ASEAN countries are essential to push the region toward being an international beacon of corporate governance. A synergistic relationship, giving due regard to regional interest when appropriate, is key to the development of a distinctly ASEAN corporate governance culture.

1 Executive Summary

Background The Association of Southeast Asian Nations (ASEAN) Corporate Governance initiative composed of the ASEAN Corporate Governance Scorecard (ACGS)and assessment and ranking of ASEAN publicly listed companies (PLCs), is among several regional initiatives of the ASEAN Capital Markets Forum (ACMF). This initiative has been a collaborative effort of ACMF and the Asian Development Bank since 2011.

ACMF Working Group D, the body responsible for this initiative, is now led by the Philippines Securities and Exchange Commission after the handover from Securities Commission Malaysia in November 2015. Its members include capital market regulators and corporate governance proponents from the region. The ASEAN scorecard was developed based on international benchmarks such as the Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance (2004) and the International Corporate Governance Network Corporate Governance Principles, as well as industry-leading practices from ASEAN and the world.

The first, second, and third editions of the annual ASEAN Corporate Governance Scorecard: Country Reports and Assessments1 provided the impetus for raising the public’s awareness on this initiative and in profiling the top domestic PLCs from each participating country. This 2015 report, which is the fifth round of assessment, continues the momentum toward elevating the visibility of ASEAN PLCs among investors. For this round, ASEAN corporate governance experts consisting of domestic ranking bodies (DRBs) from Indonesia, Malaysia, the Philippines, Singapore, and Thailand, including a corporate governance expert from Viet Nam, undertook the corporate governance assessment of ASEAN PLCs, which was concluded in October 2015. The DRBs were the Indonesian Institute for Corporate Directorship; the Minority Shareholder Watchdog Group, Malaysia; the Institute of Corporate Directors, Philippines; the Singapore Institute of Directors and the Centre for Governance, Institutions and Organisations of the National University of Singapore Business School; and the Thai Institute of Directors.

1 ASEAN Corporate Governance Scorecard Country Reports and Assessments 2012–2013, ASEAN Corporate Governance Scorecard Country Reports and Assessments 2013–2014, and ASEAN Corporate Governance Scorecard Country Reports and Assessments 2014.

1 2 ASEAN Corporate Governance Scorecard Country Reports and Assessments 2015

Assessment Methodology The OECD Principles of Corporate Governance were used as the main benchmark for the ASEAN scorecard. Many of the items in the scorecard are international and regional best practices that may go beyond the requirements of national legislation.

The ASEAN corporate governance experts also drew from the existing body of work and ranking initiatives in the region, including those of institutes of directors, shareholder associations, and universities, to guide the initial inclusion of items in the ASEAN scorecard.

The scorecard covers the following five areas of the OECD principles:

(i) Part A: Rights of Shareholders, (ii) Part B: Equitable Treatment of Shareholders, (iii) Part C: Role of Stakeholders, (iv) Part D: Disclosure and Transparency, and (v) Part E: Responsibilities of the Board.

The use of two levels of scoring is designed to better capture the actual implementation of the substance of good corporate governance. Level 1 comprises descriptors or items that are, in essence, indicative of the laws, rules, regulations, and requirements of each ASEAN member state and the basic expectations of the OECD principles. Level 2 consists of bonus items reflecting other emerging good practices and penalty items reflecting actions and events that are indicative of poor governance.

The assessments of corporate governance practices of PLCs were primarily based on publicly available and easily accessible information contained in annual reports and on company, state securities commission, and stock exchange websites. Other sources of information considered are company announcements, notices, circulars, articles of association, minutes of shareholders’ meetings, corporate governance policies, codes of conduct, and sustainability reports. As the assessments are based primarily on disclosures, these may not necessarily reflect the full extent of a participating country’s actual corporate governance ecosystem.

For a company to be assessed and ranked, most of the available documents must be in English. Further, to be given points on the scorecard, all disclosures must be unambiguous and sufficiently complete. Considering the same, the sample of PLCs in each jurisdiction may not necessarily represent the whole country’s level of corporate governance developments, transparency, and disclosures.

Prior to the commencement of assessment, the ASEAN corporate governance experts held comprehensive discussions, reviewing each item in the ASEAN scorecard to ensure clarity of the questions and assessment guidance. The review of the scorecard prior to this fifth-year assessment resulted in several changes, including rewording of some items, the removal or addition of items, and enhancements to the assessment guidance. Executive Summary 3

Following the review, parts B and E of Level 1 were revised while other parts remained the same. The score allocations for bonus and penalty sections were recalibrated such that bonus and penalty scores would be more proportionate. As a result of the review, the maximum attainable score decreased from 128 points in 2014 to 126 points in 2015 (Table 1).

Table 1: Comparison of Question Numbers and Scores in 2012, 2013, 2014, and 2015

Number of Questions 2012 2013 2014 2015 26 25 25 25 Part A [10] [10] [10] [10] 17 17 17 18 Part B [15] [15] [15] [15] 21 21 21 21 Part C [10] [10] [10] [10] Level 1 Level 42 40 41 41 Part D [25] [25] [25] [25] 79 76 75 74 Part E [40] [40] [40] [40] 11 9 11 11 Bonus [17] [42] [28] [26] 23 21 21 22 Level 2 Level Penalty [(90)] [(53)] [(50)] [(52)] ( ) = negative. Note: Numbers in brackets denote maximum attainable scores for each part. However, for the penalty section, numbers in brackets denote maximum deductible scores. Source: ACMF Working Group D Secretariat 2015.

L evel 1

Level 1 consists of 179 items and is divided into five parts corresponding to the OECD principles. Each part carries a different weight in relation to the total Level 1 score of 100 points based on the relative importance of the area. The composition and structure of Level 1 is provided in Table 2.

The weighted score of each part is obtained using the following formula:

No. of items scored by PLC Maximum Score = x attainable score Total no. of of part (in points) questions 4 ASEAN Corporate Governance Scorecard Country Reports and Assessments 2015

Table 2: Composition and Structure of Level 1

Weight Number of (% of total Level 1 Maximum Level 1 Questions score) Attainable Score Part A: Rights of Shareholders 25 10 10 points Part B: Equitable Treatment of Shareholders 18 15 15 points Part C: Role of Stakeholders 21 10 10 points Part D: Disclosure and Transparency 41 25 25 points Part E: Responsibilities of the Board 74 40 40 points

Source: ACMF Working Group D Secretariat 2015.

The total number of questions is computed after adjusting for items that are not applicable to a PLC.

As an example, if PLC1 scores in 24 out of the 25 items in part A, then:

PLC1’s score in part A = 24/25 x 10 points = 9.6 points

The Level 1 score is obtained by totaling the scores for parts A–E in Level 1. The maximum attainable score of Level 1 is therefore 100 points.

Hence, if PLC1 scores 9.6 points in part A and perfect in each of parts B–E in Level 1, then:

PLC1’s Level 1 score = 9.6 + 15 + 10 + 25 + 40 = 99.6 points

L evel 2

Level 2 consists of bonus and penalty items that are meant to enhance the robustness of the ASEAN scorecard in assessing the extent to which companies apply the spirit of good corporate governance in practice. The purpose of the bonus questions is to recognize companies that go beyond the basic expectation in Level 1 by adopting other emerging good corporate governance practices. The penalty items are designed to downgrade companies with poor corporate governance practices that are not reflected in their scores for Level 1, such as being sanctioned by regulators for breaches of listing rules.

Level 2 contains 11 bonus and 22 penalty items, each with a different number of points (Table 3). The maximum attainable bonus points are 26, while the maximum penalty points deductible are 52. Executive Summary 5

Table 3: Composition and Structure of Level 2

Level 2 Number of Questions Maximum Score (points) Bonus 11 26 Penalty 22 (52)

( ) = negative. Source: ACMF Working Group D Secretariat 2015.

The Level 2 score is obtained by totaling the bonus scores and penalty scores. In the best-case scenario, a PLC would obtain a perfect score in the bonus section and no penalty scores, thereby obtaining a Level 2 score of 26 points.

For example, if PLC1 scores 26 bonus points and 3 penalty points, then

PLC1’s Level 2 score = 26 + (–3) = 23 points

T otal Score

The total score is obtained using the following formula:

Total score = Level 1 score + Level 2 score

To illustrate, PLC1’s total score = 99.6 + 23 = 122.6 points.

The maximum attainable score is 126 points (100 points from Level 1 and 26 points from Level 2).

Default Items Default items are accorded when a country has specific legislation or requirements that will enable all domestic companies assessed to automatically score a point for a particular item. The company is considered to have adopted the practice unless there is evidence to the contrary. To ensure a transparent process, all countries must disclose their default items before the assessment process begins.

Peer Review Process The peer review process differentiates this exercise from other types of corporate governance assessments. As in previous years, the assessment process in 2015 entailed two rounds of assessments: first, with the DRBs assessing and ranking their domestic PLCs; second, by peer review by other DRBs. 6 ASEAN Corporate Governance Scorecard Country Reports and Assessments 2015

For the 2015 assessment, the top 35 PLCs, ranked according to their total scores in the preliminary assessments, were subjected to peer review by another DRB. Peer reviewers were assigned randomly for each PLC, making sure that DRBs had the opportunity to assess PLCs from all the other countries. This step was incorporated in the assessment process as a measure to validate and confirm the assessment by the DRBs and to ensure consistency in the interpretation of the questions in the scorecard.

Following a peer review, DRBs and peer reviewers carried out engagement initiatives and discussions to reconcile any differences in their scores and to agree on a final score for each PLC. Where the discussions revealed any systemic differences in a DRB’s assessment from that of the peer reviewer due to interpretation of the questions, the DRB would then have to apply the revision in interpretation and reassess across all the PLCs, including those that had not been subjected to peer review. This process of checks and balances improves the accuracy of results.

Overall Results and Analysis For the 2015 assessment, a total of 555 PLCs were assessed, which was 0.9% more than the number of PLCs assessed in 2014. The number of PLCs assessed was not equally distributed among the jurisdictions given the limited availability of disclosures in English. For instance, Viet Nam had fewer than 100 domestic PLCs assessed (Figure 1).

Figure 1: Number of Publicly Listed Companies Assessed by Country, 2015

Source: ACMF Working Group D Secretariat 2015.

The market capitalization of assessed PLCs varied in the 2015 assessment round. About 59% of the PLCs assessed boasted a market capitalization of more than $1 billion (Figure 2). The average size of PLCs was $3.3 billion, with the largest PLC being $48.7 billion and the smallest PLC being $18 million. Executive Summary 7

Figure 2: Distribution of Publicly Listed Companies Based on Market Capitalization, 2015 ($ billion)

billion– billion billion– billion billion– billion billion– billion billion– billion million– billion up to million

Note: Market capitalization and currency exchange rates as of 30 March 2015. Source: ACMF Working Group D Secretariat 2015.

The mean total score increased in 2015 to 71.81 points compared with 67.69 points in 2014 and 64.02 points in 2013. This resulted in a total increase of 6.1% from the previous year’s achievement and a total increase of 12.2% since 2013 (Table 4).

Table 4: Comparison of Total Scores, 2012–2015 (points)

2012 2013 2014 2015 Mean 53.66 64.02 67.69 71.81 Median 55.79 64.55 68.29 72.69 Maximum Attainable Score 117 142 128 126

Source: ACMF Working Group D Secretariat 2015.

Specifically for Level 1 (i.e., excluding the Level 2 bonus and penalty scores), the mean score recorded an increase of 6.4%, from 64.72 points in 2014 to 68.87 points in 2015, indicating that corporate governance practices in fundamental or core areas had improved significantly. In total, Level 1 saw an increase of 26.8% in mean scores since 2012 (Table 5).

Table 5: Comparison of Level 1 Scores, 2012–2015 (points)

2012 2013 2014 2015 Mean 54.32 60.09 64.72 68.87 Median 56.91 61.50 65.56 70.16 Maximum Attainable Score 100 100 100 100 Source: ACMF Working Group D Secretariat 2015. 8 ASEAN Corporate Governance Scorecard Country Reports and Assessments 2015

With the revision of the Level 2 scores, a slight dip to 2.94 points was recorded compared with 2.98 points in 2014 (Table 6).

Table 6: Comparison of Level 2 Scores, 2012–2015

2012 2013 2014 2015 Mean (0.66) 3.92 2.98 2.94 Median 0 3.00 2.00 2.00 Maximum Attainable Score 17 42 28 26 ( ) = negative. Source: ACMF Working Group D Secretariat 2015.

The scores of ASEAN companies had positively moved toward the upper scale in achieving maximum attainable scores (Figure 3). In addition, 33 ASEAN companies attained scores of more than 100 points, as compared with only 14 companies attaining scores of more than 100 points in 2014.

Figure 3: Distribution of Total Scores

umber of Companies

N . . . . . . . –. – – – – – . – . –. . –. . –. . –. . –. . –. . –. . – . . – . . – . . – . . – . . – . . – . . – . . – . . . – . . . . Score

Source: ACMF Working Group D Secretariat 2015. Executive Summary 9

The adoption of several voluntary best practices by ASEAN PLCs has contributed to the consistent improvement in their scores. These best practices include:

(i) Disclosure of voting and vote tabulation procedures; (ii) Appointment of an independent party to evaluate the fairness of transaction prices; (iii) No bundling of resolutions in the Annual General Meeting (AGM); (iv) Disclosure of policies to encourage shareholders including institutional investors’ participation; (v) Disclosure of policies on related party transactions including the nature and value of material/ significant related party transactions (RPTs); (vi) Disclosure of audit and nonaudit fees; (vii) Disclosure of the identity of beneficial owners and substantial shareholders; (viii) Communication of internal control and risk management systems; (ix) Disclosure of safety, health, welfare, training, and development programs for employees; (x) Having a separate corporate social responsibility or sustainability reports and the creation of a separate board-level risk committee.

Thailand continues to be the overall best performer for 4 consecutive years. Among the participating countries, Thailand has the highest mean score followed by Singapore and Malaysia. The company with the highest individual score was again from Singapore.

Figure 4: Mean Scores by Country

. . . . . . . . . . . . . . . . . . . . . . . . Indonesia Malaysia Philippines Singapore Thailand Viet Nam

Source: ACMF Working Group D Secretariat 2015. 10 ASEAN Corporate Governance Scorecard Country Reports and Assessments 2015

When the results were analyzed according to the various areas of corporate governance (Figure 5), Thailand obtained the highest mean score for four parts (A, B, C, and D) in Level 1, while Singapore scored highest in Part E. It is encouraging to note that there are PLCs that scored full points in parts A, B, C, and D.

Figure 5: Level 1 Scores by Part

Max Max Max Max Parts A and C Part B Part D Part E

. . Thailand . Viet Nam . Part A Part . Singapore . Philippines Malaysia . . Indonesia . . Part B Part . .

. . . . Part C Part . .

. . . . Part D Part . .

. . . . Part E Part . .

. . . . . . . . .

Note: Part A = rights of shareholders, Part B = equitable treatment of shareholders, Part C = role of stakeholders, Part D = disclosure and transparency, and Part E = responsibilities of the board. Source : ACMF Working Group D Secretariat 2015. Executive Summary 11

ASEAN Corporate Governance Conference and Awards and Recognition of the Top ASEAN Publicly Listed Companies The 2015 assessment marked a significant milestone for the ASEAN Corporate Governance initiative. For the first time since 2012, due recognition was given to the top ASEAN PLCs. To mark this occasion, the inaugural ASEAN Corporate Governance Conference and Awards were held in Manila, Philippines, on 14 November 2015. The event consisted of two parts: a conference with the theme “Governance Transformation in ASEAN: Reform and Priorities” held in the Auditorium of the Asian Development Bank and the ACGS Top 50 ASEAN PLCs Launch and Awards Night held at the Manila Polo Club.

Of the top 50 ASEAN PLCs,2 Thailand had the most number of companies with 23. The Philippines followed with 11 companies, while Singapore had 8, Malaysia had 9, and Indonesia had 2 companies in the top 50.

Figure 6: Distribution of Companies in the Top 50 by Country Indonesia Malaysia Philippines Singapore Thailand

Source: ACMF Working Group D Secretariat 2015.

The top 50 ASEAN PLCs are composed of a diverse mix of companies from sectors such as telecommunications, energy, and financial services, among others. The total mean score of the top 50 companies is 102.85, indicating the exceptional corporate governance practices of the companies. The high average scores for each of the parts also gives an indication that all areas of corporate governance were addressed and considered by the top companies.

The top five PLCs in the region, in alphabetical order, were also duly recognized. Bursa Malaysia (Malaysia), DBS Group Holdings (Singapore), PTT Global Chemical (Thailand), Samart Corporation (Thailand), and Singapore Telecommunications (Singapore) have the distinction of being the best companies in the ASEAN region based on the ACGS. The total mean score of the top five companies is 112.16 points, clearly setting high standards for the other ASEAN PLCs to follow. All top five companies have perfect scores in the Role of Stakeholders part and near perfect scores in the Rights of Shareholders and Equitable Treatment of Shareholders parts, which indicate the importance given by said companies to their shareholders and other stakeholders.

2 The top companies in each jurisdiction were certified by its respective regulatory body. 12 ASEAN Corporate Governance Scorecard Country Reports and Assessments 2015

Figure 7: Mean Scores per Part for the Top ASEAN Publicly Listed Companies

. . . .

. . . . . . . . . . . . .

. Part A Part B Part C Part D Part E Top ASEAN PLCs Top ASEAN PLCs

ASEAN = Association of Southeast Asian Nations, PLC = publicly listed company. Note: Part A = rights of shareholders, Part B = equitable treatment of shareholders, Part C = role of stakeholders, Part D = disclosure and transparency, and Part E = responsibilities of the board. Source: ACMF Working Group D Secretariat 2015.

In addition to the top 50 and top 5 ASEAN PLCs, the achievements of the top companies per country were also given recognition. Awards were also handed out to the top three companies per country, as well as the top two companies with Outstanding Achievement in terms of improvement in their scores. A review of the said companies per country showed that most are in the Telecommunications and Financial and Services sectors.

In the past 4 years of assessment, ASEAN PLCs assessed under the ASEAN Corporate Governance Scorecard have shown consistent and significant improvement in their corporate governance practices and standards, as evidenced by the increase not only in the total mean score from 2012 to 2015, but also by the increase in the scores received by the highest ranking PLCs. The increased awareness of corporate governance within the region reflects the success of the ASEAN Corporate Governance initiative. However, much is still left to be accomplished. As the ASEAN Corporate Governance Scorecard moves into the next phase, the assessment process shall be put on hold in 2016 and instead, focus will be given to a holistic and thorough review. This is to ensure that it is aligned with, and prescribes to, internationally recognized best standards such as the G20/OECD Principles of Corporate Governance and that it is contextualized based on the current need of the ASEAN Market and its PLCs. Each part shall then be reviewed to determine its relevance and applicability in the ASEAN context. Furthermore, for this initiative to progress further, the Scorecard must go beyond being disclosure-based. In this regard, the DRBs will determine the proper methodology to validate Executive Summary 13

the Scorecard results to ensure that PLCs’ disclosures do not just follow a tick-box approach without sacrificing the Scorecard’s independence and reliability.

With the end goal of encouraging all ASEAN PLCs to adopt the highest possible corporate governance standards, the group intends to come out with an improved ASEAN Corporate Governance Scorecard in 2016 that will not only be internationally recognized, but relevant, credible and distinctly ASEAN.

Table 7: Top 5 Publicly Listed Companies in ASEAN (alphabetical order)

No. Name Country 1 Bursa Malaysia Malaysia 2 DBS Group Holdings Singapore 3 PTT Global Chemical Thailand 4 Samart Corporation Thailand 5 Singapore Telecommunications Singapore ASEAN = Association of Southeast Asian Nations. Source: ACMF Working Group D Secretariat 2015.

Table 8: Top 50 Publicly Listed Companies in ASEAN (alphabetical order)

No. Name Country 1 Aboitiz Equity Ventures Philippines 2 Advanced Info Service Thailand 3 Ayala Corporation Philippines 4 Ayala Land Philippines 5 The Bangchak Petroleum Thailand 6 Bangkok Aviation Fuel Services Thailand 7 Bdo Unibank Philippines 8 Bursa Malaysia Malaysia 9 Capitaland Singapore 10 Central Pattana Thailand 11 CIMB Group Holding Malaysia 12 DBS Group Holdings Singapore Eastern Water Resources Development and 13 Thailand Management 14 Electricity Generating Public Company Thailand

continued on next page 14 ASEAN Corporate Governance Scorecard Country Reports and Assessments 2015

Table 8 continued No. Name Country 15 Globe Telecom Philippines 16 GT Capital Holdings Philippines 17 IJM Corporation Malaysia 18 Indorama Ventures Thailand 19 Intouch Holdings Thailand 20 IRPC Thailand 21 Kasikornbank Thailand 22 Keppel Land Singapore 23 Krung Thai Bank Thailand 24 Malayan Banking Malaysia 25 Manila Electric Philippines 26 Manila Water Philippines 27 Philex Mining Philippines 28 Philippine Long Distance Telephone Philippines 29 Pruksa Real Estate Thailand 30 PT Bank CIMB Niaga Indonesia 31 PT Bank Danamon Indonesia Indonesia 32 PTT Exploration and Production Thailand 33 PTT Global Chemical Thailand 34 PTT Thailand 35 Ratchaburi Electricity Generating Holding Thailand 36 RHB Capital Malaysia 37 Samart Corporation Thailand 38 Samart Telcoms Thailand 39 SATS Singapore 40 The Siam Cement Thailand 41 Siam Commercial Bank, The Thailand 42 Singapore Exchange Singapore 43 Singapore Post Singapore 44 Singapore Press Holdings Singapore 45 Singapore Telecommunications Singapore 46 SM Prime Holdings Philippines 47 Telekom Malaysia Malaysia 48 Thai Oil Thailand 49 Thaicom Thailand 50 Total Access Communication Thailand ASEAN = Association of Southeast Asian Nations. Source: ACMF Working Group D Secretariat 2015. Executive Summary 15

Table 9: Top 3 Publicly Listed Companies by Country (alphabetical order)

Country Name Indonesia Aneka Tambang Persero PT Bank Cimb Niaga PT Bank Danamon Indonesia Malaysia Bursa Malaysia CIMB Bank Telekom Malaysia Philippines Ayala Land Globe Telecom Philex Mining Singapore DBS Group Holdings Singapore Exchange Singapore Telecommunications Thailand PTT Exploration and Production PTT Global Chemical Samart Corporation Viet Nam Ho Chi Minh City Securities Petroviet Nam Fertilizer and Chemicals Viet Nam Dairy Products Source: ACMF Working Group D Secretariat 2015.

Table 10: Top 2 Publicly Listed Companies with Outstanding Achievement by Country (alphabetical order)

Country Name Indonesia PT Bank NISP TBK PT Bank Tabungan Negara TBK Malaysia Allianz Malaysia Top Glove Corporation Philippines Asia United Bank GT Capital Holdings

continued on next page 16 ASEAN Corporate Governance Scorecard Country Reports and Assessments 2015

Table 10 continued Country Name Singapore SATS Singapore Post Thailand Eastern Water Resources Development and Management Thaicom Viet Nam Hoang Anh Gia Lai Refrigeration Electrical Engineering Source: ACMF Working Group D Secretariat 2015. 2 Reports and Assessments

17 Indonesia

Background of the Corporate Governance Framework Since the corporate governance reform through the development of the Indonesia corporate governance road map, the corporate governance framework in Indonesia has been moving forward by gradually adopting best practices. The corporate governance road map was developed on the basis of the Organisation for Economic Co-operation and Development (OECD) principles: the corporate governance framework, protection of shareholders’ rights, the role of stakeholders, disclosure and transparency, and responsibility of the board. The main objective of the road map is to serve as a milestone to improve the implementation of corporate governance practices in Indonesia.

Several new regulations and/or amendments of the existing regulations have been released by the Financial Services Authority or Otoritas Jasa Keuangan (OJK) as a consequence of the road map. A stronger regulatory framework is necessary to meet international standards as they are specified in the Association of Southeast Asian Nations (ASEAN) Corporate Governance Scorecard (ACGS). OJK continually strengthens the country corporate governance regulatory framework to set a basis for corporations to adopt international best practices. Approaches to corporate governance were extended to the application of a “comply or explain regime” by issuing a corporate governance code for publicly listed companies (PLCs). This comply or explain approach was launched in December 2015. Figure 8 shows the process of how the corporate governance framework has been strengthened to meet international best practices.

Figure 8: Process of Strengthening the Corporate Governance Framework in Indonesia

ACMF Initiative

ACGS

Corporate Governance ROSC CLSA Roadmap

New regulations and corporate governance code for PLCs

ACGS = ASEAN Corporate Governance Scorecard, ACMF = ASEAN Capital Markets Forum, ASEAN = Association of Southeast Asian Nations, CLSA = Credit Lyonnais Securities Asia, PLC = publicly listed company, ROSC = Report on the Observance of Standards and Codes. Source: Indonesian Institute of Corporate Directorship 2015.

18 Indonesia 19 . . . Reports and Assessments and Reports Highest Score Highest . . . erage Score Av . . . e . . . Lowest Scor Indonesian Institute of Corporate Directorship 2015. Indonesia—Corporate Governance Scores, 2012–2015 Scores, Governance 9: Indonesia—Corporate Figure Source: Source: Indonesian PLCs recorded a positive increase of 5.41 points, with an average score of 57.27 points points 57.27 of score average an points, with 5.41 of increase a positive recorded PLCs Indonesian recorded was also scores in increase The 9.45%. of increase an or 2015, in points 62.68 and 2014 in score highest 44.89%. The reached 2015 until increase total The 2015. until 2012 from year on year points 103.15 to significantly increased also assessment 2015 the in PLC Indonesian an by achieved points 31.24 from score lowest the in found was also Improvement 2014. in points 91.98 with compared included were companies two Indonesian 2015, in that is Noteworthy 2015. in points 36.27 to 2014 in Overall Analysis Analysis Overall PLCs Indonesian 100 on undertaken was also assessment 2015 assessments, the As previous the in scores governance corporate the 8 shows Figure 2015. April as 30 of capitalization based market on 2015. to 2012 from To measure improvement in the implementation of corporate governance and how corporate corporate how and governance corporate of implementation the in improvement measure To assessment ACGS the its implementation, of enhancement the to has contributed reform governance regularly Directorship, Corporate for Institute Indonesian the with cooperation in was used. OJK, to related programs training facilitated also and results ACGS the of training socialization provided corporations expected that is It companies. listed publicly and issuers all to issues governance corporate based international on implementation governance corporate their improve and adopt to continue will best practices. Indonesia 20 general meeting of shareholders, POJK No. 32, significantly contributed to this improvement. 2015, while it scored lowest in 2012. The amendment of the OJK regulation pertaining to the annual of the Boards by 19.06%. The Rights of Shareholders showed the greatest improvement from 2012 to 73.48%; Role of Stakeholders by 33.33%; Disclosure and Transparency by 30.31%; and Responsibility From 2012 to 2015, Rights of Shareholders improved by 105%; Equitable Treatment of Shareholders by Since the 2012 assessment, progressive improvements have also posted been of in all Level parts 1. each of Level 1 part seenin canbe Figure 10. in the Top PLCs 50 compared ASEAN to none in the previous years. Corporate governance scores for Source: Source: Note: Figure 11: ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Maximum scores for parts A = 10; B = 15; C = 10; D = 25; and E=40. and B=15; D=25; A=10; C=10; parts for scores Maximum Figure 10: Indonesian Institute for Corporate Directorship 2015. Directorship Corporate for Institute Indonesian 2015. Directorship Corporate of Institute Indonesian .–. .–. .–. .– . .–. .– . .–. .–. Indonesia—Corporate Governance Scores: Moving Forward toHigher Clusters, . Indonesia—Weighted Corporate Governance Scores of Individual Parts . atAPr Part C Part B Part A . . . .

. . of Level 1, 2012–2015 Number ofCompanies . 2013–2015 2013–2015

. . . . . atDPart E Part D . . . . . . Indonesia 21 . Reports and Assessments and Reports . . All; n Maximum . erage Av . . BUMN; n Minimum Companies against Others, 2015 Others, Companies against . . . Bank; n – Banks and SOEs are highly regulated sectors compared with others. with compared sectors regulated highly Banks SOEs are and have they because governance corporate in investing of capable more Banks SOEs are and others. assets than larger Indonesian Institute of Corporate Directorship 2015. • • Indonesia—Corporate Governance Scores for Highly Regulated Publicly Listed Publicly Regulated Highly for Scores Governance 12: Indonesia—Corporate Figure As in previous years, banks and state-owned enterprises (SOEs) still dominated the higher score ranges, ranges, score higher the dominated still (SOEs) enterprises banks state-owned and years, As previous in much were SOEs, for which 77.66 banks and was of 83.33 scores average The 12. Figure in as revealed to contributed that two reasons are points. There 62.68 of PLCs all for score average the than higher two sectors: these of scores higher the Figure 13, in as indicated financing, equity to better access have systems governance Good corporate of that double than was more that capitalization market showed companies 50 top the which in between corporate good correlation a strong is there suggests that This companies. 50 bottom the with be associated also may capitalization market higher Thus, capitalization. market and governance systems. governance better corporate BUMN = Badan Usaha Milik Negara (state-owned enterprise). Source: More Indonesian companies obtained higher scores in the 2015 assessment, as shown in Figure 11. One Figure 11. in as assessment, shown 2015 the in scores higher obtained companies Indonesian More Indonesian Four 2014. in company no to compared 2015 in points 100 than more received company in were twocompanies only while cluster, points 90.01–100.00 the in scores attained have companies compared 2015 in points between 80.01–90.00 scores received companies Seven 2014. in cluster this points 60.01 scored 54%, companies, more that note important to also is It 2014. in companies five to are PLCs Indonesian that shows trend The 2014. in range this in 35% only to compared above and clusters. higher to moving Indonesia 22 success factors that have contributed to the increase of scores Aare in Part in Indonesia and significant changes have made been to strengthen the regulatory framework. Key rights of shareholders. OJK itself is strongly committed to strengthening corporate governance systems Moving forward, it is for important Indonesian PLCs to strengthen further initiatives to protect the of POJK No. 32, pertaining to disclosure requirements of the annual general meeting of shareholders. from 2012 (see Figure 10). It said canbe that companies have had a positive response to the issuance (on68% average, of 68% the 25items complied being was assessed with). This is a105% improvement an average of 6.80 points out of amaximum10.00 points,with the average compliance level being over the 4years last of assessment, especially in 2015. In the 2015 assessment, Indonesian PLCs scored Progressive improvements A(rights in Part of shareholders) by Indonesian PLCs have observed been Part A:Rightsof Shareholders Source: ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 (v) (iv) (iii) (i) (ii) Indonesian Institute for Corporate Directorship 2015. Directorship Corporate for Institute Indonesian

Figure 13:

s s s p i mproved quality of minutes of meetings, of minutes of mproved quality ocialization of the 2014 ACGS results. ocialization of new and amended OJK regulations, and trengthened regulatory framework to protect the rights of shareholders, ublication in English of notices of annual general meetings (AGMs), meetings general annual of notices of English in ublication ,, ,, ,, ,, ,, ,, ,, Indonesia—Corporate Governance andMarket Capitalization, 2015 – governance score.) Top (Corporate A ve rage marketcapitalization(Rpmillion) governance score.) Bottom (Corporate Indonesia 23 Reports and Assessments and Reports mprovement I s h for

mendments to a company’s constitution, mendments a company’s to uthorization of additional shares, and additional of uthorization ransfer of all or substantially all assets all or substantially all ransfer of a a t – – – – – – Rights of noncontrolling shareholders to nominate candidates for commissioners for candidates nominate to shareholders Rights noncontrolling of of directors or board of board the of remuneration approve to Shareholders’ right commissioners resolutions AGM of outcome the of Disclosure location an accessible held at AGM fairness an independent the Appointment of of party evaluate to board the by mergers of andtransaction prices acquisitions Voting by poll has by been not used commonly Voting next the by day results working AGM of Availability independent by party votes of Validation effectivelyShareholders not encouraged attend general shareholders’ to meetings Shareholders’ right to participate in decisions concerning fundamental concerning corporate decisions in participate to Shareholders’ right changes related to reas treng • • • • • • • • A • St • vailability notices in English, of AGM trengthened regulatory framework to protect the rights of shareholders, of rights the protect to framework regulatory trengthened ocialization of new and amended OJK regulations, and regulations, OJK amended and new of ocialization results. ACGS 2014 the of ocialization mprovement in the quality and standards of AGM notices, AGM of standards and quality the in mprovement i s s a s

Indonesian Institute for Corporate Directorship 2015. (ii) (i) (iv) (v) (iii) Indonesia—Strengths and Areas for Improvement in Rights of Shareholders of in Rights Improvement for Areas and Indonesia—Strengths 14: Figure Equitable treatment of shareholders has improved significantly since 2012. As revealed in Figure 10, 10, Figure in As revealed 2012. since significantly has improved shareholders of treatment Equitable The % improvement. a 73.48 or 2012, in points 5.28 from points 9.16 of a score reached companies part 61.07%. is this of level compliance average the thus, Part 15; in B is points of maximum number As with. Part in assessed A, was being complied items it 18 the of 61.07% average, on that, means This that factors success Key 2015. and between 2012 place took improvement stable that found was also Part in B are scores of increase the to contributed have AGM = annualAGM general meeting. Source: Shareholders of Treatment Equitable B: Part Indonesia 24 most large companies have separate sustainability reports. reports. have sustainability separate companies large most increase of scores Care in Part that all companies have corporate social responsibility and that reports the 4years last shown of assessment, as in Figure 10. Key success factors that have contributed to the the 21 items complied being was assessed with). Stable improvement found was year on year during 33.33% from 2012. The average compliance level in this is 69.60 part %(on average, 69.60 %out of The average score for the role of stakeholders in the 2015 assessment 6.96 was points,an increase of Part C:Role of Stakeholders Source: transaction. party =related RPT meeting, general AGM =annual ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Figure 15: Indonesian Institute for Corporate Directorship 2015. Directorship Corporate for Institute Indonesian Indonesia—Strengths andAreas for Improvement inEquitable Treatment • A • • T • • • S treng reas Poor of the quality AGM notices in terms of the following: of noncontrollingRights shareholders to approve RPTs requiring board of commissioners to review material RPTs Policies transactions available, of interest conflict such and onrelated as party information Policies oninsider of trading asymmetry advantage available, taking such as documents of proxy Availability Voting for any rights of class shares – – – – – – L L L ack of disclosure amount in and the of AGM dividend policy of dividend notice ack of disclosure of the profile auditor of independent toappointed be ack of disclosure of the toappointed profile ofbe board members

for h s I mprovement of Shareholders

Indonesia 25 Reports and Assessments and Reports mprovement I s h for

mployee health, safety, and welfare; health, safety, mployee and development training mployee ustomer health and welfare, and health ustomer rights,reditors’ ustomers’ welfare; ustomers’ rights; reditors’ eparate sustainability report ustainable development, ustainable development; nteraction with the communities, and communities, the with nteraction nteraction with communities; the c s c i s c s c i e e – – – – – – – – – – – – – – – – – – – – – – Implementation of stakeholders’ policies related to stakeholders’ of related policies Implementation Lack of company policies on implementation of supplier management supplier of on implementation policies Lack company of implementation and their policies Lack anticorruption of e.g., and safety, health about number employee of information of Lack disclosure of injury cases, etc. as such rewards long-term about employee information of Lack disclosure of plans option stock employee Availability of policies on stakeholders’ interest in relation to on stakeholders’ relation in policies of interest Availability reas treng • • • • • A St • Indonesian Institute for Corporate Directorship 2015. Indonesia—Strengths and Areas for Improvement in Role of Stakeholders of in Role Improvement for Areas and Indonesia—Strengths 16: Figure Part D: Disclosure and Transparency D: Disclosure Part as 2012, since improvement a year-on-year shows transparency and disclosure of Implementation points 17.50 to 2012 in points 13.43 from scores in increase the can be seen in This 10. Figure in revealed on that, means This part 70%. is this in level compliance average The improvement. a 30.31% or 2015, in compliance largest the is assessed. being This items 25 the of 70% with complied companies average, imposed regulations the to attributed is area this parts. in strength The individual five the among level have that PLCs some still are there that is noteworthy Also transparency. and disclosure on OJK by Figure transparency. and disclosure for fundamental considered are that items several disclose to failed part. this in PLCs Indonesian for improvement for areas and strengths of areas the shows 16 Source: Indonesia 26 critical role to ensure that the board takes on itsresponsibility effectively and efficiently. governance practices best is akey success factor in enhancing this area. Regulations canalso play a directors still to need pay more attention to this measure. Board commitment to adopt corporate among the five individual Although there parts. year-on-year was improvement during 2012–2015, complied with only 52.48% out of the 79 items being assessed). It the was lowest compliance level points in 2015. This means that the average compliance level 52.48 was % (on average, companies a 19.06% improvement from 2012 to 2015, shown as in Figure 10. The average total score 20.99 was Board practices implemented by Indonesian companies are still weak. It found was that there only was Part E:Responsibilities of theBoard Source: ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Indonesian Institute for Corporate Directorship 2015. Directorship Corporate for Institute Indonesian Figure 17: • • • • • • A T • • S • • • • treng Indonesia—Strengths andAreas for Improvement inDisclosure reas Lack ofLack disclosure of companies’ constitution in English Weak disclosure auditor of nonaudit to paid fees external Trading of company shares by insiders ofcode corporate governance ofLack disclosure of confirmation related statement to compliance full with the Weak disclosure of remuneration of directors details Shareholding of board of board commissioners and of directors in terms of of annual report Quality shareholding ormore disclosureGood of corporate structure in holding termsowners of 5% beneficial Contact details of investor details Contact relations of financial annual and release reports Timely Various company and website of models communication reports quarterly such as Disclosure transactions of related party – – – – – – – – – – d biog n f k inancial performance indicators; inancial performance ey risks; isclosure including of board meetings, attendance details onfinancial indicators; onfinancial

raphical data ofraphical and board of commissioners members; for h s I mprovement and Transparency

Indonesia 27

continued on next page on next continued Reports and Assessments and Reports of the Board of mprovement I s h um for BOC for um decisions for

eeting schedule/plan of BOC of schedule/plan eeting isclosure of board remuneration policy remuneration board of isclosure isclosure of committee of isclosure charter isclosure of board charter board of isclosure BOC types the approval requiring of decisions of isclosure learly defined responsibility board learly defined statement and vision mission eelection every commissioners of 3 years eview vision and vision mission eview xistence rocess followed for BOC for appointment followed rocess imit of board seat for independent for seat commissioners board of imit enure of independent commissioners of enure election criteria for BOCelection for criteria tructure dentification of the head of internal audit internal of head the of dentification ndependence ndependence S P R D I I T L M Quor E S I D D D R C C – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – Board members equipped knowledge with and experience sector the in the where background accounting and have operates company secretary corporate the of Role mitigation risk of Disclosure officer betweenSeparation executive chairperson and chief Board process: Internal audit function: audit Internal Board structure: Audit committee: Board duties and responsibilities: Board duties Board responsibility in terms of the following: the of terms Board in responsibility reas treng • • • • • • • • A • St • Indonesia—Strengths and Areas for Improvement in Responsibilities in Responsibilities Improvement for Areas and Indonesia—Strengths 18: Figure Indonesia 28 Figure 18continued Indonesian PLCs to adopt corporate governance best practices beyond the minimum requirements. Level 2items contributed significantly to the overall score achieved by companies. It is for important Figure 20 shows the areas of strengths and areas for improvement for Indonesian PLCs in this part. positive net bonus points during the shown assessment as period, in Figure 19. The attainment of net bonus tended to static be from 2012 to 2015. However, companies received shows the net bonus and scores penalty from 2012 to 2015. regulations, inconsistency of stated policies, and other poor corporate governance practices. Figure 19 practices beyond those in Level 1, while points penalty are intended to eliminate violations of laws and result in a reduction. Bonus points are intended to motivate companies to adopt corporate governance obtain the total score. Apositive net score will increase the total score, and anegative net score will Level 2is the bonus and section. penalty Scores from this section are added to the scores in Level 1to Bonus andPenalty Source: commissioners. of =board BOC ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Indonesian Institute for Corporate Directorship 2015. Directorship Corporate for Institute Indonesian Source: Figure 19: • • Indonesian Institute of Corporate Directorship 2014. Directorship Corporate of Institute Indonesian People onthe board: Board performance – – – tatement of BOC on the adequacy oftatement onthe of internal adequacy BOC control – – – . S R I ndependent chairpersonndependent Indonesia—Net BonusandPenalty Scores, 2012–2015 esponsibility of theesponsibility chairperson . Net Bonus . . Indonesia 29 Reports and Assessments and Reports Shareholder participation can be enhanced by improving the the improving by can be enhanced participation Shareholder mprovement I s h for

Announcement of audited financial reports financial audited Announcement of 60 days within risk committeeBoard-level AGMs during absentia in electronic voting secure of Use AGM the before least at announced days 28 AGM of Notice Integrated reporting committeeNominating structure identifying strategic Process of quality company’s aligned commissioners with of direction members details board of remuneration the of Disclosure independent commissioners Female reas treng St • • A • • • • • • • Indonesia—Strengths and Areas for Improvement in Bonus and Penalty in Bonus Improvement for Areas and Indonesia—Strengths hareholder participation. quality of AGM notices, especially with respect to the disclosure of profiles of the members members the of profiles of disclosure the to respect with especially notices, AGM of quality the of profile the of (BOC) disclosure be appointed, to commissioners of board the of especially engagement, Shareholder policy. dividend the of disclosure and auditor, external shareholders’ further promote to channel can be effective an shareholders, institutional with active involvement. S

20: Figure Indonesian Institute for Corporate Directorship 2015. (i) Conclusions and Recommendations higher to moving companies more and scores governance corporate in improvement Year-on-year in system governance a better corporate of development the for a signal provide cluster decimal A significantly. forward moving is shareholders foreign and minority of protection The future. the governance corporate the of enhancement the in role a critical plays framework regulatory stronger Indonesian to a challenge remains best practices international to commitment Board 2015. in score strengthen need to the recommended, is practices best voluntary of adoption the Although PLCs. best adopt to companies for a baseline up set to be critical to continues framework regulatory the is it 2015, of results assessment Based the standards. on international with accordance in practices the among ASEAN especially the about scorecard, level awareness low the to attention pay to critical future. the in score governance corporate the enhance to companies, 50 bottom as follows: are practices governance corporate enhance to areas Other AGM = annualAGM general meeting. Source: Indonesia 30 ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 (iii) mpowerment commissioners. ofindependent (ii) Table 11:

directors’ remuneration performance. to directors’ conducted by the BOC for the purpose of succession planning and to link the board of schemes. annual An performance evaluation of the board of directors should also be the results of the evaluation with competency requirements, including board remuneration in the process of evaluation. The evaluation objectives should set be up especially to link links to company’s performance. The board should develop the evaluation criteria and steps including committees is apowerful under tool the to BOC, seehow corporate governance B E management of conflict of interest. is critical for the BOC to in act the interest of the company and to ensure an effective with core skills, and business expertise, aptitude. Professionalizing the board composition the nomination committee are to important ensure the appointment of qualified directors effective decision making. The selection and appointment of independent commissioners by independent commissioners beyond OJK’s regulations to ensure a robust process leading to oard performance. No. 10 14 18 16 19 12 15 13 17 11 4 8 9 6 2 5 3 7 1 Indonesia—Top 50Publicly Listed CompaniesBasedon2015Total Score Listing Code ABMM BDMN ANTM AUTO BNGA BMTR AKRA BBTN BBCA APLN BJTM BMRI BHIT BBNI BJBR BNLI BBRI BNII ASII

Evaluation of the awhole BOC as and of the individual members, (alphabetical order) ABM Investama Agung Podomoro Land Aneka Tambang (Persero AKR Corporindo Bank Mandiri(Persero) Bank Pembangunan Daerah Jawa Timur Bank Pembangunan Daerah Jawa Barat danBanten MNC Investama Bank Danamon Indonesia Bank Tabungan Negara (Persero) Bank Rakyat Indonesia (Persero) Bank Negara Indonesia (Persero) Bank Central Asia Astra Otoparts Astra International Bank Permata Maybank Indonesia Bank CIMBNiaga Global Mediacom PLCs should increase the number of Name continued onnext page Indonesia 31 Reports and Assessments and Reports Name Wijaya Karya Beton Karya Wijaya Wijaya Karya Wijaya Chandra Asri Petrochemical Chandra Tractor United Sarana Menara Nusantara Menara Sarana Summarecon Agung Summarecon Sedaya Investama Saratoga Indonesia Telekomunikasi Perusahaan Gas Negara (Persero) Gas Negara Perusahaan Indonesia Bank Pan Bukit Asam (Persero) (Persero) Perumahan Pembangunan Bank OCBC NISP Matahari Departement Store Departement Matahari Indonesia Sumatra PP London Bank Mega Vale Indonesia Vale Prakasa Tunggal Indocement Megah Tambangraya Indo (Persero) Marga Jasa Farma Kalbe Bank Tabungan Pensiunan Nasional Pensiunan Bank Tabungan Sentosa Swastatika Dian Golden Enery Mines (Persero) Garuda Indonesia Supermarket Hero Makmur CBP Sukses Indofood Bumi Serpong Damai LSIP ISAT Indosat ICBP LPPF NISP TPIA INTP PTPP KLBF BSDE EXCL XLAxiata GIAA JSMR SRTG DSSA PTBA PGAS ITMG BTPN INCO WIKA TLKM GEMS SMRA PNBN HERO UNTR UNVR Unilever MEGA TOWR WTON Listing Code Listing Indonesian Institute for Corporate Directorship 2015. 31 21 41 37 33 35 27 47 32 39 23 25 36 43 38 45 34 22 24 26 29 42 49 46 28 48 44 50 30 20 40 No. Source: Source: Table 11 continued Table Malaysia

Background of the Corporate Governance Framework The amendments to the Capital Market Services Act and Listing Requirements were introduced in 2015 to further enhance the integrity of the Malaysian capital market and improve the corporate governance culture among the publicly listed companies (PLCs). These amendments were aimed at strengthening investor protection and boosting investor confidence in the Malaysian capital market while creating sustainable shareholder value.

The highlights of the amendments include the following:

• Amendments to the Capital Market Services Act effective 15 September 2015. The amendments to securities laws were made to facilitate innovative fundraising structures, enhance investor protection, clarify responsibilities of issuers and advisers, and expand the scope of the Securities Commission’s supervisory powers. This includes the introduction of a new recognized market framework of an alternative trading platform and granting the Securities Commission with the power to appoint an independent advisor in takeover and merger transactions should the offeree fail to do so. • Amendments to the Listing Requirements effective 27 January 2015. The amendments to the Listing Requirements by Bursa Malaysia which took effect from 27 January 2015 were aimed at strengthening investor protection and promoting greater transparency through various enhancements to the foreign listing requirements. With these amendments, foreign principal subsidiaries will be required to immediately announce any change in legal representation. • Sustainability framework. Bursa Malaysia continues to play a critical role in shaping a more sustainable capital market by setting standards and defining best practices to facilitate sustainability practices and disclosures among PLCs. In October 2015, Bursa Malaysia launched its new sustainability framework, comprising amendments to the Listing Requirements and the issuance of a Sustainable Reporting Guide and Toolkits, paving the way toward greater integration of sustainable strategies among PLCs. Moving forward, PLCs will be required under the Listing Requirements to disclose a narrative statement of their material economic, environmental, and social risks and opportunities in their annual reports. The Sustainability Reporting Guide and Toolkits will provide PLCs with an in-depth guide and practical methods to embed sustainable business strategies; assess the impact of material economic, environmental, and social risks and opportunities on their business and their stakeholders; and report on them. While the amendments to the Listing Requirements will take effect on a staggered basis over 3 years, starting from 31 December 2016 until 31 December 2018, all PLCs are encouraged to initiate the process early.

32 Malaysia 33 Reports and Assessments and Reports Working closely with other market players, the Securities Commission is also in the process of charting charting of process the in also is Commission Securities the players, market other with closely Working to amendments as as making next well 5 years the for Priorities Governance Corporate Malaysian the Governance. Corporate Code on Malaysian the Minority the by (MCII) Investors Institutional Code for Malaysian the of launch the Following Investor Institutional the 2014, July in Commission Securities the and Group Watchdog Shareholder investors’ institutional the among from members 14 (comprising 2015 July in was formed Council stewardship. investor of area the oversee to fraternity) Malaysian the in milestone a significant marked Council Investor Institutional the of formation The by MCII the of adoption effective promote to serves as and a platform landscape governance corporate companies. investee among culture governance corporate of spectrum a wider shaping and influencing the of signatories become to investors institutional advocates also Council Investor Institutional The imposing by investors responsible becoming towards commitment their shows it As a signatory, MCII. companies. investee on expectations governance corporate their The MCII. the to signatories become had asset and asset owners managers eight 2015, of end the By Bhd, Sdn Hermes ValueCap (Diperbadankan), Persaraan Wang Kumpulan include signatories notable Paribas BNP and Investment, General & Asset Managers, Aberdeen Legal Management, Fund Partners. Investment their disclose to required are PLCs where diversity board encourage to been taken have Initiatives gap the fill to encouraged also are age. and PLCs ethnicity, sets, skill gender, covering policies diversity up make women have to Malaysia of Government the by set target the with line in diversity gender in 2016. by boards PLC of 30% its in role play to As continues Group appointed DRB, the Minority the Shareholder Watchdog governance corporate their improve and enhance to PLCs Malaysian educating and advocating PLCs the of management and board the with held were sessions Various disclosures. and practices Governance (ASEAN) Corporate AsianNations Southeast of Association the using assessments on 100 top the for only not carried were assessments the Malaysia, For methodology. (ACGS) Scorecard other all extended to also ASEAN the were under but project, capitalization market to according PLCs assessed 2015. in were PLCs 870 total, In PLCs. Malaysian Malaysia 34 76.90 points. Figure 22 From 2013 to 2015, the overall average corporate governance scores steadily improved from 71.69 to score 86.78 was points compared with 85.19 points in 2014. a maximumscore of 104.47 and aminimum score of 51.91 in 2014. For the top 50 PLCs, the average 76.90 points in 2015), with amaximumscore of 111.22 and aminimum score of 55.25 in 2015 compared The overall average corporate governance score increased by 1.68 points (from 75.22 points in 2014 to mandated under Malaysian laws, regulations, and listing rules, unless there is evidence to the contrary. items. In respect of the default items, companies are assumedto have complied with them they as are The companies were against assessed 179 items of the ACGS, of which 30 were default response Meetings, corporate governance policies, codes of ethics and conduct, and sustainability reports. exchange website, circulars, Memorandums and Articles of Association, minutes of Annual General from annual corporate reports, websites, company announcements on the Malaysia Bursa stock The top 100 PLCs were on publicly based assessed disclosed information (as of July 31 2015) obtained linked companies. The industry distribution of the top 100 PLCs is illustrated in Figure 21. Malaysia’s total market capitalization. Atotal of 29 of the top 100 PLCs are categorized government- as 10% of the total number of PLCs on the Malaysia Bursa stock exchange and account for 83% of Bursa The top 100 PLCs by market capitalization (as of 30 April 2015) that were in 2015 assessed represent Overall Analysis Source: ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Consumer Products Industrial Products Malaysia Minority Shareholder Watchdog Group 2015. Group Watchdog Shareholder Minority Malaysia Tr Infrastructure ading/Service Construction Technology Plantation Property Finance Hotel shows the overall performance of the 100 PLCs from 2013 to 2015. Figure 21:Malaysia—Industry Distribution, 2015 Number ofCompanies Malaysia 35

. e . owest Scor Reports and Assessments and Reports . . eL . rage Scor ve –. – . . . 2013–2015 by Band, 2013–2015 by . eA . Highest Scor Highest . Malaysia—Corporate Governance Scores of Top 100 Publicly Listed Companies Listed 100 Publicly Top of Scores Governance Malaysia—Corporate ≥ –. – shows the trend on average score by band from 2013 to 2015 for the top 100 PLCs. Compared Compared PLCs. 100 top the for 2015 to 2013 from band by score average on trend the shows

Malaysia Minority Shareholder Watchdog Group 2015. Malaysia Minority Shareholder Watchdog Group 2015. . . . . . Figure 23: Figure . . Malaysia—Corporate Governance Scores of Top 100 Publicly Listed Companies, Listed 100 Publicly Top of Scores Governance Malaysia—Corporate 22: Figure Source: Source: Source: Source: to 2013 where one company scored below 50 points, all other companies scored above 50 points with with points 50 above scored companies other points, all 50 below scored company one where 2013 to 90 above scored which companies of number The 2015. in points 55.25 to improving score lowest the 89.9 - 80 the within scored companies 19 2015. in 19 to 2014, in 17 and 2013 in 11 from increased, points 2014. in 14 to compared range points Figure 23 Malaysia 36 Source: board. the of E=responsibilities Part and transparency, and Note: shows the distribution of average scores for the top 100 companies. scores B (equitablein Part treatment of shareholders) showed a decline compared with 2014. Table 13 stakeholders), D(disclosure Part and transparency), E(responsibilities and Part of the board). However, In 2015 on average, PLCs showed improvements A(rights in Part of shareholders), C(role Part of with an average score of 83.78 and consumer products (77.00). best-performing sector with the highest average score of 86.68 finance was followed by construction The average corporate governance scores of the top 100 PLCs by sector is depicted in Table 12. The Average Score Score (Points) Maximum Score Maximum Possible Score Table 13:Malaysia—Distribution of Average Scores for Top 100Publicly Listed Companies, ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Table 12:Malaysia—Average Corporate Governance Scores of Top 100Publicly Listed Part A = rights of shareholders, Part B = equitable treatment of shareholders, Part C = role of stakeholders, Part D = disclosure D=disclosure Part stakeholders, of C=role Part shareholders, of treatment B=equitable Part shareholders, of A=rights Part Malaysia Minority Shareholder Watchdog Group 2015. Group Watchdog Shareholder Minority Malaysia Source: available. not – =data Trading/Service Technology Property Plantation Infrastructure Industrial Products Hotel Finance Consumer Products Construction Malaysia Minority Shareholder Watchdog Group 2015. Group Watchdog Shareholder Minority Malaysia Sector 0459 36 .018.60 6.40 13.60 5.95 2014 0492 50 00 37 37.87 23.78 10.00 15.00 9.20 2014 0562 13.04 6.20 2015 0351 28 .81.325.19 17.23 5.88 12.81 5.18 2013 0596 50 00 37 37.84 23.78 10.00 15.00 9.60 2015 0388 50 00 31 35.79 23.13 10.00 15.00 8.80 2013 Year Companies by Sector, 2013–2015 00 50 00 50 40.00 25.00 10.00 15.00 10.00 atAPr atCPr Part E Part D Part C Part B Part A 2013–2015 04 78 66.67 67.81 60.42 04 62 76.23 76.25 70.47 09 34 73.28 73.49 70.93 02 06 76.45 70.64 70.20 06 43 77.00 74.30 70.63 92 01 71.23 70.16 69.20 94 76.46 79.43 53 07 57.11 60.79 55.35 11 38 86.68 83.85 81.13 0321 2015 2014 2013 – 6.70 – 83.78 57.53 86 29.22 18.60 27.96

Malaysia 37 Reports and Assessments and Reports , ay , Sunw , CIMB Group , Bursa Malaysia, CIMB , Bursa Malaysia, obacco obacco s ansparency Tr s eatment of Shareholder eholders Tr ole of Stak R Disclosure and Board of the Responsibilities Rights of Shareholder Equitable Airports Holdings, Maxis, Public Bank, Sime Darby Airports Holdings, Maxis, Public Bank, Sime Axiata Group, Bursa Malaysia, Sime Darby Malaysia, Bursa Axiata Group, Axiata Group, British American T British Axiata Group, Banking, Malaysian Group Holdings, IOI Corporation, Malayan CIMB Group Holdings, AMMB Holdings, Bursa Malaysia, Malaysia Telekom Bursa Malaysia, IJM Corporation, IJM Plantations Bursa Malaysia, British American T Bursa Malaysia, Holdings, IJM Plantations, Malaysia Building Society Malaysia Holdings, IJM Plantations, Telekom Malaysia Telekom Malaysia Minority Shareholder Watchdog Group 2015. Source: Source: Malaysia—Exemplary Companies in Each Section Companies in Each Malaysia—Exemplary 24: Figure Part A: Rights of Shareholders Rights of A: Part Part A, Under shareholders. of rights the on emphasis strong places framework regulatory Malaysia’s response 7 default are there category, this In rights. shareholder of area assessed the in were companies compared points 6.19 to 4.0% by increased score average The examined. 25 parameters the of out items 2014. in points 5.95 with general annual of terms In shareholders. of rights the efforts made safeguard to have PLCs Malaysian announced and resolutions, all for notice least days’ 21 at provided companies the all (AGMs), meetings conducted All companies day. next working the by resolutions the including AGM, the of outcome the or policies their disclosed also PLCs the of 81% of A total locations. accessible easily in AGMs their as investors, institutional and shareholders by meetings general at attendance encourage to practices improve should companies However, company. the with engagement increased as promote to well the of notice the in item agenda each for explanation and rationale the providing by disclosures their AGM. High-performing companies in each of the sections of the ASEAN scorecard are presented in Figure 24. in presented are ASEAN the of scorecard sections the of each in companies High-performing Malaysia 38 dealing with such items. Malaysian PLCs also adequately disclosed the profiles of directors who were conflict of interest in RPTs are default response there items, as are laws, rules, or regulations in Malaysia of multiple resolutions in their AGM Rules agenda. prohibiting insider trading and disclosure of directors’ The notices of the AGM for all the companies were published in English, with avoiding 99% the bundling disclosed in their annual save reports, for one company that did not make such adisclosure. shares, and for those with more than one class of shares, the voting rights of such shares were clearly the one-share–one-vote principle. Most of the listed companies (81%) have only one class of ordinary The Malaysian regulatory framework equitable supports treatment of shareholders evidenced as by compared with 13.60 points in 2014. parameters, seven are default response items. The average score showed aslight decrease to 13.03 This category examines the equitable treatment of shareholders in the company where, of the 17 Part B:Equitable Treatment of Shareholders The strengths and areas for improvements identified Aare in Part shown in Figure 25. shares (Section 132D), share buy and backs, recurrent RPTs. and administrative in nature, such appointment as of directors and auditors, general mandate to issue encourages companies to conduct poll voting on other substantive resolutions that are not procedural to mandate poll voting for all resolutions. Currently, the Malaysian Codeon Corporate Governance Listing Requirements. However, Malaysia Bursa will amending be itsListing Requirements in 2016 voting on major disposals and related transactions party (RPTs) required as under the Malaysia Bursa for all resolutions remained the same at six in 2015. Companies in Malaysia conduct mandatory poll line with the one-share–one-vote principle. The number of companies that conducted apoll vote for nonexecutive directors. Companies are encouraged to conduct apoll vote on all resolutions in AGM, excluding other remuneration such allowances, as in benefits and kind, other emoluments all Malaysian companies sought shareholders’ approval only for payment of directors’ fees at the being declared for interim dividends and being after approved at the AGM for final dividends. Almost The current assessment revealed that athird of the companies paid dividends within 30 days after PLCs tend to disclose only the approving and dissenting votes while ignoring the abstaining votes. breakdown of the approving, dissenting, and abstaining votes for each agenda item. Most Malaysian There should also greater be transparency in terms of the disclosure of voting results including the clearly an improvement, compared with 2013 when only 17 companies observed this practice. well detailsas as of question-and-answer sessions which took place during such meetings. This is minutes of shareholder meetings, including information on attendance of directors and management, their AGM minutes compared with 26 in 2014. PLCs need to step up and provide disclosure better of counterparts is the disclosure of AGM minutes. Among the top 100 PLCs, companies 34 disclosed The one area in which Malaysian PLCs may improving be but have yet to match their ASEAN ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Malaysia 39 Reports and Assessments and Reports mprovement I s h for

shows the strengths and areas for improvements in the equitable treatment treatment equitable the in improvements for areas and strengths the shows Nondisclosure of rationale and explanation for each agenda item which requires requires agenda which item each for and explanation rationale of Nondisclosure accompanying the and/or AGM/circulars of notice the in approval shareholders’ statement and policies, on the and procedures, insights AGMs of minutes of Nondisclosure AGMs conduct of as such for approving, dissenting, results and abstaining votes voting of Nondisclosure agendaeach item packages for remuneration opportunity beShareholders to given approve to fees only of directors instead nonexecutive Dividends be manner to paid a timely in poll by be to voted All resolutions Notice of AGMs published in a timely manner and outcome of AGMs announced by by announced AGMs of manner and a timely outcome in published AGMs of Notice nextthe day working location an easy-to-reach in AGMs Organized institutional including encourage shareholders to practices and/or policies Disclosed general company attend meetings the the to or engage with investors reas treng • • • • • • St • • • A Malaysia Minority Shareholder Watchdog Group 2015. Malaysia—Strengths and Areas for Improvement in Rights of Shareholders in Rights of Improvement for and Areas Malaysia—Strengths 25: Figure seeking election and/or reelection, and clearly identified the auditors who were seeking reappointment reappointment seeking were who auditors the identified clearly and reelection, and/or election seeking AGM. the of notice the in disclosing clearly 35% only with PLCs, of policies dividend on explanations of a lack still is There were RPTs their whether disclose should RPTs undertaken have that PLCs addition, In policies. such There interests. minority to detrimental not were and length, arm’s at and manner a fair in conducted that PLCs For assistance. financial under be classified could that RPTs with companies a few also were shareholders. disinterested by made decision the had all approval, shareholders’ required that RPTs had minority to abuse potential mitigate will and shareholders minority of protection the ensures This 26 Figure shareholders. shareholders.of AGM = annualAGM general meeting. Source: Malaysia 40 value chain, and interaction with the communities. on customer health and safety, supplier and/or contractor selection and criteria, environment-friendly the companies. More companies had disclosed the activities undertaken to implement the policies Communication channels where stakeholders could voice their concerns were generally provided by disclosed. health, safety, and welfare, training well staff as as and development programs, were also clearly company’s to interact efforts with communities. Policies on safeguarding creditors’ rights, employees’ elaborating to ensure on their efforts an environment-friendly value chain, and even the extent of the their corporate websites. Malaysian PLCs have also made commendable disclosures of their policies corporate responsibility statement, while afew offered specific stand-alone sustainability on reports Almost all the Malaysian PLCs (96%) had aseparate section in their annual disclosing reports their and 6.68 points in 2015. under this category shown has steady improvement, from 5.88 points in 2013 to 6.40 points in 2014 regulators, but also with the interest of itssuppliers, creditors, and society in mind. The average score Stakeholders play an role. important Acompany deals not only with itsshareholders, customers, and Part C:Role of Stakeholders Source: transaction. party =related RPT meeting, general AGM =annual ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Malaysia Minority Shareholder Watchdog Group 2015. Group Watchdog Shareholder Minority Malaysia Figure 26: Malaysia—Strengths andAreas for Improvement inEquitable Treatment • • • A • • • T • • • S treng reas Clear that statement RPTs at are and conducted fair arm’s length lead to abusive transactions to the shareholders detriment of minority RPTs other in the than form ofto subsidiaries financialwhollyowned assistance could ofLack explanation policies ondividend shareholders Decision onRPTs that shareholders’ approval need were made by disinterested RPTs by directors Adequate policies and rules dealing with abusive insider trading, self-dealing, and reappointmentAuditors clearly seeking identified Adequate disclosure and/or of election the profiles of reelection seeking directors Notice of AGMs and/or circulars available easily in documents English proxy and No bundling of resolutions in AGM

for h s I mprovement of Shareholders

Malaysia 41 Reports and Assessments and Reports mprovement I s h for

alth, safety, and welfare policy for employees; and policy and welfare employees; for alth, safety, stomers’ welfare, nvironmentally-friendly value chain; value nvironmentally-friendly afeguarding creditors’ rights; taff training and development programs taff and development training upplier and/or contractor selection contractor practice, upplier and/or eward or compensation policy or compensation and employees, for eward nternal anticorruption programs and procedures programs anticorruption nternal nteraction with communities; he s cu s r i e i s – – – – – – – – – – – – – – – – – – Lack of disclosure of whistle-blowing policy and of whistle-blowing procedures, and implementation of Lack disclosure of articulated well policy not such and procedures Corporate social responsibility disclosure in the annual report, annual the in or separate disclosure responsibility Corporate social sustainability website report company on the Good disclosure of policies relating to to relating policies of Good disclosure to relating or policies Lack disclosure of reas treng • • A • St • Malaysia—Strengths and Areas for Improvement in Role of Stakeholders of in Role Improvement for and Areas Malaysia—Strengths 27: Figure Malaysia Minority Shareholder Watchdog Group 2015. A sound corporate governance practice promotes transparency which helps investors make well- make investors helps which transparency promotes practice governance corporate sound A companies. and between stakeholders trust and confidence builds and decisions, investment informed for items response default considered four assessed, with were parameters 41 category, this Under Source: and Transparency D: Disclosure Part With the introduction of the Sustainability Reporting Guide, Malaysian PLCs are expected to are PLCs Malaysian Guide, Reporting Sustainability the of introduction the With short in fall still as many practices, governance and social, environmental, strong demonstrate practices, selection contractor and/or supplier welfare, customers’ on policies to relating disclosures procedures. and programs anticorruption internal and employees, for policies compensation or reward The be improved. to needs which area a key still is policies whistle-blowing of establishment The and illegal concerning employees by complaints for place in procedures had that companies of number companies of number the Similarly, 2015. in 58% to 2014 in 67% from decreased behavior unethical reveal they when retaliation from individual or employee an protect to procedures and policies with of summary The 2015. in 46% to 2014 in 52% from decreased also behavior unethical and/or illegal 27. Figure in shown is stakeholders of role the in improvement for areas and strengths Malaysia 42 disclosure and transparency. and disclosure could(35%) improved. further be Figure 28 highlights the strengths and areas for improvement in detailspolicy of (38%), the whistle-blowing policy (53%), and remuneration of each individual director improvement at 55% (2014: 24%) and 52% (2014: 26%), respectively. Disclosures of the dividend The disclosures of corporate objectives and key other risks than financial showed risks much the company did not provide explanation(s) for such a departure and,hence, were not given ascore. Corporate Governance, attributed often to the that fact in instances where there noncompliance, was not disclosed astatement that confirmed the company’s full compliance with the Malaysian Codeon key management to disclosed be in the annual Atotal report. of 41 companies were deemed to have foundbe in the financial statement, it is uncommon for details of trading by other insiders such as trading in company shares by insiders. While disclosures of directors’ trading in company shares can In terms of key areas for improvement, only 11% (8% in 2014) of the companies disclosed details of 22% uploaded Memorandum &Articles of Association in 2014. and articles of association. In comparison, only 26% companies uploaded their minutes of AGMs and the minutescompanies uploaded of AGMs memorandums uploaded their websites, 30% while on only company announcements, and contact details for investor relations. However, only 34% of the a majority offering information on their business operations, financial statements, annual reports, All the top 100 companies had corporate websites required as under the Listing Requirements, with disclosing the amount of nonaudit fees paid and/or payable to the same audit firm. for each material and/or significant RPT. Allcompanies disclosed the audit with fees, majority also encouraging but improved. further canbe Companies that had RPTs disclosed the nature and value of the company. Atotal of 55% of the companies disclosed nonfinancial indicators well, as which is performance indicators, offering valuable insight to shareholders and investors on the financial health In terms of the quality of the annual all the reports, top 100 companies disclosed their financial and quality of itsmanagement. a good understanding of the company’s business, financial strengths, corporate governance practices, is in important making the company attractive to investors. should The report provide itsreaders with The annual is report an tool important for communicating with investors. such, As quality reporting management. senior of shareholdings shareholders and directors. Similar to 2014, only one company chose to disclose the direct and indirect with more than 5% shareholding, well the as as direct and indirect shareholdings of the substantial companies disclosed the direct and indirect shareholdings of directors, and beneficial owners The majority of companies were assessed transparent in terms of their ownership structure. All points in 2013 to 18.60 points in 2014, and 18.86 points in 2015. Malaysia. The average score in terms of disclosure and transparency steadily has increased from 17.23 ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Malaysia 43 Reports and Assessments and Reports mprovement I s h for

Lack of disclosure of direct and indirect shareholdings of senior direct management and of of indirect shareholdings Lack disclosure of insiders by shares company in details trading of of Lack disclosure of with full compliance company’s the statement of confirmation of Lack disclosure of Code on Corporate Governance Malaysian the and Memorandum & Articles general minutes meeting annual of of Lack disclosure of Association risks), financial than risks objectives, corporate (other key of Lack disclosure of individual of and remuneration policy, details whistle-blowing of dividend policy, directors Disclosure of the identity of the beneficial identity the shareholders owners the and of substantial of Disclosure and shareholders substantial direct of and the indirect shareholdings of Disclosure directors performance financial of indicators Disclosure party significant related and/or material each for and value nature the of Disclosure transaction fees and nonaudit audit of Disclosure relations contact with details investor for website company Informative reas treng • • • • A • St • • • • • • Malaysia—Strengths and Areas for Improvement in Disclosure and Transparency in Disclosure Improvement for and Areas Malaysia—Strengths Malaysia Minority Shareholder Watchdog Group 2015. 28: Figure The board is the cornerstone of the company’s governance framework. It needs to play an active role in in role active an play to needs It framework. governance company’s the of cornerstone the is board The stakeholders other and shareholders of interests best the that ensure to practices governance improving the of parameters the of bulk the forms category This policies. disclosure transparent served by are its high 40% at given weightage highest has the also It 179. a total of out 76 with ASEAN scorecard score average The Malaysia. for items response default were nine parameters, importance. 76 Of the and 2014 in points 27.96 to 2013 in points 25.19 from increasing, hasbeen category steadily this for 2015. in points 28.86 of majority The 29. Figure in depicted are category this under improvement for areas and strengths The reports annual their both in board the of responsibilities and roles the disclosed clearly PLCs Malaysian their of aware are board the of members that ensures charter board The charters. board their and also It as directors. conduct their affecting regulations various as as the well responsibilities, and duties are Governance Corporate Code of Malaysian the of recommendations and principles the that ensures company. the of behalf on and respect in dealings their all in applied Source: the Board of Responsibilities E: Part Malaysia 44 criteria used for such assessments. committees’ assessments in 2015. However, made only disclosures further 40% on the process and compared with 74% in 2014. More companies had also conducted individual directors’ and board and individual directors. annual An performance assessment conducted was by 92% of companies undertake aformal and rigorous annual evaluation of its own performance and that of itscommittees compared with 10% in 2014. corporate Good governance practice recommends that the board should The number of companies that granted options to their independent directors decreased to 3% disclosure of the fee structure for nonexecutive directors to need improved. further be in particular those that relate to policies and/or practices for executive directors and CEOs, well as as shareholders that the check-and-balance functions are adequate. Disclosure of remuneration matters, code of ethics, companies should also explain how they implement and monitor compliance to assure disclosed that the board took the lead in reviewing their annual corporate strategies. With regard to the the company’s “vision” and “mission” statement during the 5years. past Atotal of 54% of the companies In terms of areas for improvement, only 19% (31% in 2014) of companies that asserted they had reviewed disclosed their internal control procedures and/or risk management systems in place. an effectivebe deterrent to corporate governance transgressions and fraud. Allof the listed companies audit functions that provided acrucial line of defense to shareholders, which, when applied well, can appointment and/or removal of the internal auditor. All of the 100 companies had separate internal responsibility for recommending the appointment and/or removal of the external auditor well the as as Similar to the findings in 2014, many listed companies vested the audit committee with the primary supporting the board in discharging itsresponsibilities compared with 74% in 2014. 3.3). In 2014, 83% of companies that asserted their company secretaryplayed asignificant role in shareholders’ approval if it wishes to retain this director an independent as director (Recommendation anonindependentas director (Recommendation 3.2); or the board must and justify seekthe for served morehas than 9years may continue to the serve board subject to the directors’ redesignation Recommendation 3.3 of the Malaysian Code on Corporate Governance, an independent director who directors increased slightly from 12% in 2014 to 15% in 2015. Under Recommendation 3.2 and The number of companies that adopted aterm limit of 9years or less for their independent making independent from the management. appropriate balance of power, increasing accountability, and improving the board’s capacity for decision by an independent chair. The separation of the roles of chair and CEO is in important ensuring the the roles of chair and chief executive (CEO), officer with (2014: 38% of the boards 48%) being led With regard to board structure, 95% (92% in 2014) of the companies had different persons assuming risk oversight, also etc., increased significantly in 2015. approval, which, among others, cover acquisitions and disposals, share issuance, financial structuring, 2015. The number of companies that disclosed of the decisions types that required board of directors’ to 93% in 2015, while the establishment of acode of ethics improved from 67% in 2014 to in 68% The number of companies that established board charters showed an increase from in 2014 77% ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Malaysia 45 Reports and Assessments and Reports mprovement I s h for

Disclosure of the roles and responsibilities of the board the of and responsibilities roles the of Disclosure approval board typesthe requiring of decisions of Disclosure primary on the committee the with Audit recommendation for responsibility and removal appointment and the external the of auditor, and removal appointment auditor internal the of management risk systems and/or procedures control internal the of Disclosure statements had “vision” and “mission” company’s on whether the Lack disclosure of past the during board the 5 years, took the board and whether the been by reviewed strategy corporate annual the of review the in lead its ethics, of code of details and the explanation the of of Lack disclosure of and monitoring implementation assessment board the used board of for and criteria process Lack disclosure of assessment reas treng • • • • • • St • A Malaysia Minority Shareholder Watchdog Group 2015. Malaysia—Strengths and Areas for Improvement in Responsibilities of the Board of in Responsibilities Improvement for and Areas Malaysia—Strengths 29: Figure Bonus and Penalty governance corporate good adopting to comes it when improvement show to continue PLCs Malaysian emerging adopted that Companies 30. Figure in as shown 1, Level in items beyond go that practices while be recognized, will committee, risk board-level a separate having example, for practices, good Of be penalized. will regulations and rules of as violations such practices governance poor with those items. default were three penalty items, 21 the was highest The 2014. in points 4.47 with compared points was 4.79 2015 in bonus overall average The of number increased was the in improvement A notable 2013. in points 13 with compared points 15 48% to 44% 2014 from in improved which board, the on director female least one at having companies Source: One of the ways in which constructive debate can be encouraged is through having sufficient diversity diversity sufficient having through is be can encouraged debate constructive which in ways the of One 43% only diversity, board of terms In diversity. gender to, limited not is but includes, This board. the on of 11% only up made report. Women annual their in policy diversity board their 40%)(2014: disclosed in that revealed also boards on directors women of scrutiny Further 2015. in 12% and 2014 in boards the having of its target lags behind still Malaysia directors. independent were 5.8%) (2014: 6.4% only 2015, comprehensive more and serious make must Companies 2016. by boards corporate on women 30% be a more to likely is board diverse and as inclusive an imbalance, gender this efforts improve to effective one. Malaysia 46 practices. area An where improvements in expected the can be near future is the role of stakeholders. and management of the PLCs to take steps to improve their corporate governance disclosures and The results of the assessment where gaps to addressed be were identified have enabled boards their corporate governance standards to meet higher expectations. shows that despite more stringent parameters and assessment over the years, PLCs are able to raise the 3years last from 71.69 points in 2013 to 76.9 points in 2015. The improvement in the overall score among PLCs in Malaysia evidenced as by the increase in the overall score under Level 1by 7.27% over environment. These initiatives have resulted in the improvement of acorporate governance culture strong regulatory framework to advance corporate transparency in the building of aresilient business term sustainability. Malaysian regulators have progressively taken steps with the introduction of a to adopt international governance disclosures and practices in their operations to enhance long- Watchdog Shareholder Minority The practices. Group continues best and to influence companies PLCs have guided been by this framework which benchmarked was against international standards The Malaysian corporate governance framework continued has to strengthen over the years, and Conclusions andRecommendations Source: officer. executive CEO =chief thebeen company CEO for the 3years. last recommendation by the board. Afew companies also incurred their points penalty as chairperson had the approvaljustification shareholders’ on or and may directors, sought based be nonindependent that independent directors who have for served more than 9years may either redesignated be to than 9years, aslight decrease from 57% in 2014. In Malaysia, the corporate governance code suggests Under the section, penalty 52% of the companies had independent directors who had for served more risk oversight process also increased significantly from 26% in 2014 in to 2015. 44% in 2015. The number of companies that set up separate board-level risk committee to strengthen the ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Malaysia Minority Shareholder Watchdog Group 2015. Group Watchdog Shareholder Minority Malaysia Figure 30:Malaysia—Strengths andAreas for Improvement inBonusandPenalty • • A T • • • S treng reas Chairperson same as the company as CEO same 3yearsChairperson for the last for more than 9years serve directors Independent More companies with aseparate board-level risk committee director onboard onefemaleMore independent companies with at least notice forLonger the annual meeting (at period general 28 days) least

for h s I mprovement Malaysia 47 Reports and Assessments and Reports isclosure of AGM minutes and Memorandum & Articles of Association; of & Articles Memorandum and minutes AGM of isclosure isclosure of board’s succession planning process for key management; key for process planning succession board’s of isclosure reports; and annual risks in nonfinancial of isclosure isclosure of directors’ remuneration by individual directors, including fees and other other and fees including directors, individual by remuneration directors’ of isclosure isclosure of environmental, social, and governance policies and practices, especially those those especially practices, and policies governance and social, environmental, of isclosure criteria and process the including assessment, board on practices and policies of isclosure nonlisted and listed in directorships separates clearly which profile directors’ of isclosure tatement on level of shareholding by senior management. management. senior by shareholding of level on tatement mplementing tenure limit of 9 years for independent directors; independent for 9 years of limit tenure mplementing ncreasing the number of women on boards to improve gender diversity; diversity; gender improve to boards on women of number the ncreasing d s d bands; by of instead emoluments i d d linking to companies’ sustainability and strategy; i d assessments; the for used d companies; d

(ii) (i) (ix) (x) (vii) (viii) (iii) (v) (vi) (iv) PLCs must recognize the importance of strengthening their corporate governance to safeguard the the safeguard to governance corporate their strengthening of importance the recognize must PLCs and above practices best pursue to strive continuously and stakeholders, and shareholders of interests beyond the minimum legal requirements. six Group, Watchdog Shareholder Minority the and efforts the regulators to by As a testimony Inaugural the at PLCs” 50 Top “ASEAN of accolade prestigious the awarded were PLCs Malaysian according PLCs 50 top of list The 2015. November in Manila in Awards ASEAN Governance Corporate 14. Table in shown is rank to Sustainabilityreporting is gaining traction in Malaysia, especially with the heavier emphasis on measures, as policies, such matters sustainability material of management their disclose to companies as recommended matters sustainability these to relevant indicators and be taken to or taken actions or practices sustainable of quality higher a to lead will This Guide. Sustainability BursaMalaysia the in a at still reporting, while integrated Adopting expectations. stakeholders’ realizing and disclosures, and direction. right the in be a step may Malaysia, stage in nascent respective the of analysis the in as identified improvement for areas several still are there Nevertheless, are further can improve PLCs Malaysian which in areas key Some sections. Malaysia 48 Source: Malaysia Minority Shareholder Watchdog Group 2015. Group Watchdog Shareholder Minority Malaysia Source: ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Rank 0Maxis 20 24 22 25 23 10 14 18 19 16 21 12 15 13 17 11 4 8 6 9 2 5 3 7 1 Allianz Malaysia Top Glove Corporation MSM Malaysia Holdings RHB Capital Nestle (Malaysia) Malaysia Airports Holdings IJM Plantations Axiata Group Public Bank Malaysian BuildingSociety Petronas Chemicals Group UMW Holdings Astro Malaysia Holdings UEM Sunrise UMW Oil &Gas IJM Malayan Banking CIMB Group Holdings Tenaga Nasional Sunway Sime Darby LPI Capital Telekom Malaysia Bursa Malaysia Table 14:Malaysia—Top rank) 50Publicly Listed Companies(by Company Rank 40 50 0DiGi.Com 30 4MISC 44 48 46 49 42 28 29 26 45 34 43 38 47 39 36 2IOI 32 27 35 3DRB-Hicom 33 37 41 31 United Plantations Post Malaysia Bintulu Port Holdings Kulim (M) BIMB Holdings Cahya Mata Sarawak Hong Leong Financial Group Petronas Dagangan Malaysian Resources Fraser andNeave Holdings Guinness Anchor Petronas Gas Hong Leong Bank Affin Holdings KPJ Healthcare Bumi Armada IOI Properties Group Alliance Financial Group IHH Healthcare UEM Edgenta British American Tobacco (M) Company Philippines

Background of the Corporate Governance Framework Ever since the Philippines began its involvement in the Association of Southeast Asian Nations (ASEAN) Corporate Governance Scorecard (ACGS), the Securities and Exchange Commission of the Philippines (SEC) has been using the results to guide it in the formulation of rules and regulations which have improved the country’s corporate governance framework involving publicly listed companies (PLCs).

For one, the SEC required all PLCs in 2013 to submit an annual corporate governance report. The report became the focal point for all public disclosures by PLCs of their corporate governance policies and practices.

The SEC also used the ACGS as a basis for discussion when it developed and launched the Philippine Corporate Governance Blueprint in conjunction with other players in the corporate governance ecosystem. The blueprint utilized the best practices espoused in the ACGS along with other global corporate governance principles as the foundation for a program which was designed to strengthen the corporate governance regime in the Philippines over the next 5 years.

Many of the recommendations contained in the blueprint are consistent with the best practices espoused by the ACGS:

(i) Release of the information statements 28 days before the annual stockholders’ meeting (ASM). Rationale and explanation of each agenda item that requires shareholders’ approval should be provided. (ii) Right of shareholders to nominate candidates to the board. Full disclosure of experience and background of the candidates to the board including other board positions in listed companies is expected. (iii) Voting by poll at the ASM. (iv) Material/significant RPTs and similar matters involving conflicts of interest should be disclosed fully, accurately, and in a timely fashion. (v) Companies should give special attention to their customers, consumers, and other major constituencies. Relations with creditors, suppliers, and contractors should always be conducted in a professional and objective manner. (vi) Employee performance enhancing mechanisms are encouraged. Programs and relative information on the welfare and development of the employees should be available. (vii) Transparent ownership structures. (viii) Disclosure of financial and nonfinancial performance with the corporate objectives should be included in the annual report. Companies may consider applying the framework of sustainability or integrated reporting in their annual report.

49 Philippines 50 performance of itstop 100 PLCs during the period. made the Philippines one of the most improved countries in the region in terms of the consolidated the Philippines showed a dramatic improvement from 48.9 points in 2012 to 73.09 points in 2015. This Directors, the domestic ranking body (DRB) appointed by the SEC for the ACGS, the country score of aresultAs of these and other initiatives undertaken by the SEC and the Institute of Corporate according capitalization. market their to their market capitalization of March 31 as 2015. Figure shows 31 the distribution of these companies The top 100 Philippine PLCs that were the focus of the 2015 assessment were selected according to Overall Analysis Source: Exchange. Stock Philippine the from are Data Note: andup ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 –. – . (xiii) (xii) (xi) ompanies should have aformal and transparent board(x) nomination process. There should (ix) Institute of Corporate Directors (Philippines) 2015. (Philippines) Directors Corporate of Institute

the chief executive (CEO) officer is recommended. A T B organization. the in accountability and responsibility determining A C independent directors. companies should have aboard diversity policy. They are encouraged to have female disclosed. should be the committees also succession be planning for key management positions. oard committees should established be to improve the work of the board. The charter of here should aright be mix of backgrounds and competencies in the board; therefore, n annual assessment of the performance of the individual directors board committees, and ll companies should have an internal audit function. There should aclear be system of Figure 31: Philippines—Profile of Top 100 Publicly Listed Companies by Market Capitalization

Philippines

51 Total Score Total . .

Penalty

. Bonus and Bonus

Reports and Assessments and Reports

of the Board the of Responsibilities .

ansparency Tr . and Disclosure .

Stakeholders . of Role

Highest Attainable Score by Part Attainable Highest

of Shareholders of . Treatment Equitable

Shareholders Philippines—Total Score Distribution, 2014 and 2015 Distribution, Score 32: Philippines—Total Figure of Rights . . Industrial (25) Services (19) Holdingfirms (18) (15)Properties Financial (14) Mining and and oil (8), (1) boards emerging and medium, Small, Institute of Corporate Directors (Philippines) 2015.

• • • • • • • Source: The average corporate governance scores of the top 100 Philippine PLCs by market capitalization rose rose capitalization market by PLCs Philippine 100 top the of scores governance corporate average The 2015. in points 73.09 to 2014 in points 67.02 from The number of assessed companies belonging to each sector category of the Philippine Stock Exchange Exchange Stock Philippine the of category sector each to belonging assessed companies of number The is as follows: Philippines 52 publicly available the working next day. There are five default items for Philippine PLCs in this category. minutes of the indicate ASM the of resolutions that were adopted during the and are ASM made Other areas worth recognizing are that all shareholders are encouraged to attend the and the ASM 21 days They before were the ASM. also made available on the Philippine Stock Exchange’s website. information statements. Consistent with 2014, PLCs’ information statements were released at least observation is that more companies disclosed the voting and vote tabulation procedures in their governance. In addition, companies allow cumulative voting for directors. This year, one positive shareholders to directors elect individually. This right is also disclosed in their manuals on corporate embedded in the Corporation Codeof the Philippines (CCP). Under the CCP, companies allow their The rights of shareholders to participate in decisions concerning fundamental corporate changes are Part A:Rightsof Shareholders billion. $10 and billion $5 between The category that received the highest average score is the group whose companies’ capitalization is Figure 33 shows the average scores of the companies by category according to market capitalization. in 2015, maximumis 26). responsibilities of the board (26.51 points in 2015, maximumis 40), and the bonus section (2.79 points special attention should given be to the role of stakeholders (5.45 points in 2015, maximumis 10), 2014). Although there are alot of things that still to need done be to raise the scores in all categories, 16.61 points in 2014) and rights of shareholders (7.62 points in 2015 compared with 6.78 points in scores on ayear-on-year basis is in disclosure and transparency (18.96 points in 2015 compared with shownAs in Figure 32, of the five governance categories, the most dramatic improvement in average Source: ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Figure 33:Philippines—Average Scores of Top 100Publicly Listed Companiesby Market Institute of Corporate Directors (Philippines) 2015. (Philippines) Directors Corporate of Institute . . . Capitalization Category –. . . –. . . andup . Philippines 53 Reports and Assessments and Reports mprovement I s h for

Dividends should be paid within 30 days after declaration and approval. after declaration Dividends days 30 be should paid within ASM. the poll during by Companies vote should approving, the results including dissenting, andVoting abstaining should be in the ASM. the of or minutes results Companies allow shareholders to elect to shareholders Companies allow directors individually. disclosed. are procedures tabulation and vote Voting ASM. released is the before least at 21 days ASM statement) of (information Notice resolutions. ASM most recent the includes of outcomes of The disclosure reas treng • • • St • • • • A Philippines—Strengths and Areas for Improvement in Rights of Shareholders in Rights of Improvement for and Areas Philippines—Strengths Institute of Corporate Directors (Philippines) 2015. 34: Figure Part B: Equitable Treatment of Shareholders of Treatment Equitable B: Part shareholders, all of treatment equitable the ensure should framework governance corporate The required are directors treatment, equitable this ensure To shareholders. foreign and minority including have notices The interest. of a conflict have they when discussions in participating from abstain to seeking auditors the and item per agenda resolution one only have them as of most improved arm’s an in conducted are RPTs that declared have PLCs More identified. clearly are appointment a have should companies the abusive, not are RPTs that further ensure to However, way. length a challenge has become This RPTs. material the reviewing directors independent entirely of committee cases, most composed in is which, committee, audit the by reviewed are RPTs as their PLCs many for directors. independent of a majority of company in dealings report officers their and to directors required already have companies Some this however, ACGS; the by recommended best practice the with align to days 3 business within shares PLCs. Philippine many for improvement for areas the of be one to remains Although the number of PLCs paying their dividends within 30 days from the date of declaration declaration of date the from days 30 within dividends their paying PLCs of number the Although also Companies PLCs. Philippine for improvement for items the of one remains it 2015, in increased agenda each by received votes of number the ASM. during Further, poll by voting consider needto approving, of number the ASM, the of including results the or minutes the in be disclosed should item dissenting, and the abstaining votes. ASM = annual stockholders’ meeting. Source: Philippines 54 company’s performance beyond short-term financial measures. should consider adopting the practice of having areward policy for employees, which accounts for the than the general contact details that are usually found on the companies’ websites. In addition, PLCs more specific contact details for other stakeholders to voice possible violations of their rights more policies and activities on how they relate with their other stakeholders, PLCs should also provide This category is still where Philippine PLCs received the lowest score. from Aside disclosing their in the companies’ annual corporate governance report. their programs on the development and welfare of their employees. This information is easily available that more PLCs have separate corporate social responsibility sections and have disclosed details of disclose their policies and activities on how they relate with other stakeholders. The assessment found This year’s result for this category shows no improvement, indicating that many PLCs have yet to Part C:Role of Stakeholders Source: transaction. party =related RPT meeting, stockholders’ =annual ASM ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Figure 35:Philippines—Strengths andAreas for Improvement inEquitable Treament Institute of Corporate Directors (Philippines) 2015. (Philippines) Directors Corporate of Institute • • A T • • • S treng reas company shares within 3 business days. business 3 within shares company should haveCompanies their in dealings requiring to directors apolicy report independent directors. Material and/or RPTs significant reviewed should be by of acommittee declareCompanies that RPTs are in arm’s an conducted way. length theappointment notice in auditors its clearly seeking ofCompanies identify the ASM. Resolutions of in the the recent most companies ASM only deal with oneitem.

for h s I mprovement of Shareholders

Philippines 55 Reports and Assessments and Reports mprovement I s h for

Companies may adopt a reward and/or compensation policy for employees which which policy compensation employees for and/or a reward adopt Companies may measures. financial performance short-term company’s beyond the for accounts be should employees of and development training on the information Relevant disclosed. rights their should of possible violations stakeholdersA contact can that voice use to website. report annual the in company either be or on the provided The safety, health, and welfare programs for the employees are disclosed. are employees the for programs health, and welfare The safety, reports sections and/or and responsibilities social corporate separate Companies have sustainability reports. sections and/or employees. for programs and development training the of Disclosure reas treng • • • St • • • A Institute of Corporate Directors (Philippines) 2015. Philippines—Strengths and Areas for Improvement in Role of Stakeholders of in Role Improvement for and Areas Philippines—Strengths 36: Figure Part D: Disclosure and Transparency Disclosure D: Part in a presumption is There governance. corporate modern of demands two major of one is Disclosure against deterrent effective a major is disclosure transparent more and fuller that governance corporate disclose must PLCs items the identifies part The disclosure on malpractices. governance corporate Philippine practices. governance corporate good of observance better secure to public general the to the report that governance corporate annual The category. this in year better this are scores PLCs’ In public. the to available necessary information the make helped PLCs from requires SEC Philippine of help the with RPTs their of details the clearly disclose PLCs areas, more strong last year’s to addition report. governance corporate annual the of one remains this directors, their of remuneration the of details the disclosed have PLCs four Although assessment The category. Transparency and Disclosure the in PLCs Philippine for challenges main the briefings. media and analyst conducted have they if clear not is it PLCs of majority the for that found officers and of directors by shares company of trading of summary the show not do also Disclosures company. the Source: Philippines 56 and nonexecutive directors, meeting separately without the presence of any executives. these protocols are the 9-year term limit for independent directors, five board seats limit for directors independent directors in the board and some other protocols recommended by the ACGS. Some of There are items that remain challenges for Philippine PLCs, such increasing as the number of their internal control and risk management systems. conduct. Through the annual corporate governance more report, PLCs have clearly communicated board committees. This year, more PLCs have disclosed the details of their code of business ethics and companies are comprehensive, including the roles and responsibilities of the board, directors, and score from 24.41 points in 2014 to 26.51 points in 2015. The manuals on corporate governance of the average total their increasing category this improvement in PLCs significant show to continue Philippine esponsibilities of theBoard governance policy and,within the it, definition of board responsibilities. of the PLCs’ concern The first affairs. that to has fully be addressed is the formulation of acorporate board the has originalwhich carries task, with it the fiduciary duty, of overseeing the management take on the role, duties, and responsibilities that the laws, rules, and regulations vest upon them. The The second major demand of modern corporate governance is for the Board of Directors to actively Part E: Source: ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Institute of Corporate Directors (Philippines) 2015. (Philippines) Directors Corporate of Institute Figure 37:

R • • • • A • • • T • • S treng reas Details of remunerationDetails of each disclosed. director should be Trading in company of key and shares directors disclosed. should officers be oneof theof modes communication. as briefings should analyst use Companies evident in should the be companies’ disclosures. briefings Media year-end. within were audited 120Annual financial statements released days fromthe financial Audit were fees disclosed. transactions. disclosedCompanies the nature value and of material and/or related significant party report. indicators of the financial companiesThe performance are available in their annual shareholdings indirect and of direct substantialThe shareholders are available. Philippines—Strengths andAreas for Improvement inDisclosure

for h s I mprovement and Transparency

Philippines 57 Reports and Assessments and Reports of the Board of mprovement I s h for

The board should be composed of at least beThe should composed board at of 50% independent directors. be should two-thirds. decisions board for quorum The minimum listed seats publicly in board number of the a policy limiting Companies have should hold simultaneously director may an independent or nonexecutive that companies to five. less or its for independent 9 years of directors. a term limit Companies have should any without meetdirectors least year should the at during once The nonexecutive executives present. Roles and responsibilities of the board are clearly stated. clearly are board the of and responsibilities Roles disclosed. are directors’ approval require that Decisions available. are ethics Details code of the of management independent of are independent directors their that declare Companies shareholders. and substantial communicated. management and risk clearly systems are control Internal reas treng • • • • A • St • • • • • Philippines—Strengths and Areas for Improvement in Responsibilities in Responsibilities Improvement for and Areas Philippines—Strengths 38: Figure Institute of Corporate Directors (Philippines) 2015. Bonus and Penalty the before days least 28 at statements information their released PLCs of number An increasing used is statement information Code, the Regulation Securities the of 20 Section ASM. to Pursuant of meeting ASM other or the during upon be acted need to that matters any of shareholders notify to created have PLCs more that indicate also assessment year’s this from results The shareholders. the meet not do PLCs Philippine most that observed also is It committee. risk board-level a separate even members. companies Some board independent of number the on practice recommended the There 9 years. than more for been directors serving as independent have who members board have The companies. listed of boards five than serving more members on board have that companies are board the of chairperson the of role the separate not do companies some that found also assessment person. same the by held are two positions the that and CEO the of that from Source: Philippines 58 improved governance. corporate created by the regulators now falls on the PLCs and investors who are the prime beneficiaries of responsibility formaintainingmapping the the wayThe through momentum blueprint. forward its The SEC should commended be for taking an active position in promoting corporate governance and improvements. assessment but were still rated by the Institute of Corporate Directors—have not yet shown similar the larger companies while the remainder—including vast those PLCs that were not of the part ACGS espoused by the ACGS. mentioned, As much of the improvement in PLC scores concentrated was in remains much work to done be in terms of convincing the rest of the PLCs to adopt the bestpractices recognition that 11 of itsPLCs were included top 50 in PLCs the ASEAN on the based ACGS, there While the Philippines can pride itself on the improvement of itsoverall country scores and the Conclusions andRecommendations Source: ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Figure 39:Philippines—Strengths andAreas for Improvement inBonusandPenalty Institute of Corporate Directors (Philippines) 2015. (Philippines) Directors Corporate of Institute • • • A T • • S treng reas than fiveboards of publicly companies. listed should haveCompanies onmore nonexecutive and noindependent serving directors for more should than haveCompanies 9years. serving directors noindependent persons. of chairperson theThe boardthe different and chief two should be executive officer companies haveSome aseparate board-level risk committee. meeting. stockholders’ their information release 28Companies days at statement least before the annual

for h s I mprovement Philippines 59

Reports and Assessments and Reports continued on next page on next continued

tock Exchange tock cial Banking urefoods vings Bank ational Bank ational ong Distance Telephone ong Distance ater quity Ventures ower oldings elecom nibank est Banking f The Philippine Islands nited Bank nited ara Mining and Power ara on 2015 Total Score Score on 2015 Total rime Holdings o Pacific Investments o Pacific and Trust Bank opolitan gy Development ickel Asia ickel T Capital Holdings T Capital nion Bank of The Philippines nion Bank of yala Land yala remium Leisure remium etron opez Holdings opez irst Gen irst ntegrated Micro-electronics ntegrated nternational Container Terminal Services Terminal Container nternational Manila Electric Manila W Philex Mining Philippine L SM P A A BDO U Globe T G DMCI H East W F I L N P Philippine N P Rizal Commer The Philippine S U Ener I Metr Metr Philippine Sa San Miguel P Security Bank Semir Belle Aboitiz E Aboitiz P Asia U Bank o China Banking

8 10 7 9 1 2 3 4 5 6 11 1 4 5 6 7 8 9 10 11 12 13 2 3 5 7 8 12 13 2 1 4 6 9 10 3 PLCs scoring 90 points – 99 points (in alphabetical order) – 13 PLCs – 13 – 99 points (in 90 points scoring alphabetical order) PLCs PLCs scoring 80 points – 89 points (in alphabetical order) – 13 PLCs 80 points – 89 points (in scoring alphabetical order) PLCs PLCs scoring 100 points and above (in alphabetical order) – 10 PLCs (in order) alphabetical 100 points and above scoring PLCs Philippines—Top 50 Publicly Listed Companies based Companies Listed Publicly 50 15: Philippines—Top Table (Based on the top 100 companies according to market capitalization) market to according 100 companies (Based on the top Philippines 60 ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Table 15continued Source: company. listed PLC =publicly Institute of Corporate Directors (Philippines) 2015. (Philippines) Directors Corporate of Institute PLCs scoring belowalphabeticalorder) 80points(in –14PLCs 11 7 6 3 2 14 13 12 10 9 8 5 4 1

V T T T S SM I R Philippine Sev Philippine Banko L F F F Alsons Consolida T Group ar Eastern University ilinvest Land ilinvest Development Corporation tarmalls tarmalls op Frontier Investment Holdings ravellers International Hotel Group rans-Asia Oil andEnergy Development ockwell Land ista Land&Lifescapes nvestments en f Communications ted Resources Singapore

Background of the Corporate Governance Framework Singapore’s corporate governance rules and regulations are made up of the Companies Act (Chapter 50), the Securities and Futures Act of 2001 (Chapter 289), the Singapore Exchange (SGX) Listing Rules, and the Code of Corporate Governance (2012). The Monetary Authority of Singapore and the SGX are the two main bodies overseeing corporate governance practices of Singapore’s publicly listed companies (PLCs). The Companies Act is the overarching legal framework for all companies incorporated in Singapore and it also sets out the duties of directors and officers. It was amended in 2014 and the changes were effected in two phases, in July 2015 and in January 2016.

The combination of legislation, listing rules, and the Code of Corporate Governance embodies Singapore’s stance on maintaining high standards of corporate governance, while giving companies (of varying sizes and resources) sufficient flexibility in adopting these principles.

SGX, as the frontline supervisor of the securities market in Singapore, is responsible for administering its own business rules (including listing rules) and is empowered to take disciplinary action or impose sanctions on PLCs for breach of the SGX Listing Rules. These rules include requirements for PLCs to comply with the principles in the Code of Corporate Governance or otherwise provide a meaningful explanation on the noncompliance in their annual reports. PLCs that fail to do so and do not respond to subsequent queries satisfactorily may face disciplinary action. SGX also works closely with the Monetary Authority of Singapore and the Commercial Affairs Department to ensure that any market misconduct is swiftly detected, thoroughly investigated, and effectively dealt with so as to create an environment in which fair and efficient capital markets can thrive.

Singapore is recognized both regionally and globally as having a highly robust corporate governance framework. This has been validated by the Asian Corporate Governance Association’s Corporate Governance Watch reports. The biennial report put Singapore at the top of the list of major Asian economies consecutively for the past three reports in 2010, 2012, and 2014. Titled “Balancing Rules and Flexibility,” a study published by the Asian Corporate Governance Association and KPMG in 2014 examined the corporate governance requirements across 25 markets in terms of clarity and completeness of content, degree of enforceability, and prevalence.3 The Asian Corporate Governance Association-KPMG study ranked Singapore third globally, trailing behind the United Kingdom and the United States, and first in Asia. These studies reflect a strong momentum effect in the evolving corporate governance framework for Singapore.

3 Covering markets in three broad geographic regions: Asia and the Pacific; Europe, Middle East, and Africa (EMA); and the Americas (United States, Canada, and Brazil).

61 Singapore 62 governance practices. governance Singapore providing in disclosures PLCs detailed their corporate on have efforts madesignificant total scores from year. last Average scores of Level 1increased from 67.00 to 74.60. This shows that PLCs scored 70.72 out of the maximumof 128 points. There is an increase of around 10% in absolute Singapore PLCs on average scored 78.11 out of the maximumscore of 126 points.In 2014, Singapore y K SGX. on listed capitalization of the top 100 Singapore PLCs S$550 was billion, which accounted for 67% of all PLCs The cutoff date to determine the market capitalization March 31 was 2015. The combined market Singapore’s top 100 PLCs by market capitalization are included of the part 2015 as assessment. items they as are mandatory requirements under Singapore’s corporate governance framework. items for Singapore PLCs, which means each company to has in be compliance with these default similarities. This is demonstrated by the that fact 20 assessment items in the scorecard are default Principles (2004) and the Singapore Codeof Corporate Governance in differ emphasis, there are governance practices are guided by the SGX Listing Rules. Though the OECD Corporate Governance and practices PLCs, including of ASEAN Singapore PLCs. Singapore PLCs’ disclosure of corporate of Corporate Governance (2004). This assessment aims to raise the corporate governance standards benchmarked against Organisation for Economic Co-operation and Development (OECD) Principles The Association of Southeast Nations Asian Corporate (ASEAN) Governance Scorecard (ACGS) is Methodology Overall Analysis Table 16:Singapore—ASEAN Corporate Governance Scorecard Total Score, 2014and2015 e ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 F University of Singapore Business School 2015. School Business Singapore of University Sources: Nations. Asian Southeast of =Association ASEAN indings 041843.9–105.5 128 2014 2015 Year Singapore Institute of Directors and Centre for Governance, Institutions and Organisations of the National National the of Organisations and Institutions Governance, for Centre and Directors of Institute Singapore Total Score Maximum 126

Total Score 49.0–116.0 Range Total Score Average 70.7 78.1

Average Level 1Score (Out of 100) 67.0 74.6 Singapore 63 .– . Reports and Assessments and Reports . .– .– . . .– .– Score Range . . .– el 1 Scores score distribution for the 2014 and 2015 ACGS assessments. The figure assessments.figure The ACGS 2015 and 2014 the for distribution score

. .– ev L . .– Singapore—Total Score Distribution, 2014 and 2015 2014 Distribution, Score 40: Singapore—Total Figure

mber of Companies of mber Nu Singapore Institute of Directors and Centre for Governance, Institutions and Organisations of the NationalUniversity of Comparison of Comparison of are which scores, 1 based Level on primarily compared are PLCs Singapore of results ACGS annual The From time. over changes to been subjected have weightages and 2 scores points, as Level 100 of out points. Table 17 74.60 to 56.42 from improved steadily have 1 scores Level average the 2015, to 2012 1 scores Level Average years. 4 the of each for PLCs 100 the of scores 1 Level average the illustrates 2015. to 2014 from 11.3% increased have Figure 41 provides the distribution of the 100 PLCs by total score in 2015. The top 10 Singapore PLCs PLCs Singapore 10 top The 2015. in score total by PLCs 100 the of distribution the provides 41 Figure Holdings, CapitaLand, Group DBS are order alphabetical in arranged scores total highest the with Singapore Exchange, Singapore SATS, & Transportation, Telecommunications Land, Keppel Keppel Corporation. and SMRT Press Holdings,Post, Singapore Telecommunications, Singapore Sources: Singapore Business School 2015. shows that PLCs—21 of 28 such companies—which scored in the range of 50–60 in 2014, have made made have 2014, in 50–60 of range the in scored companies—which such 28 of PLCs—21 that shows that companies the are These 2015. in range score 60–80 the into moved and improvements significant improvements. higher for account thus and (70.72) 2014 in score total average below a far obtained Figure 40 provides the total Singapore 64 to 2015, with companies continuing to provide disclosures pertaining to stakeholders’ engagement. of the board). Scores C(role in Part of stakeholders) have also continuously been improving from 2013 average made the improvements biggest A(rights in Part of shareholders) E(responsibilities and Part average,On Singapore PLCs much performed in better all sections. Compared to 2014, PLCs on 1 scores for the period 2013–2015. detailed disclosures on practices already in place. Figure 42 provides adetailed breakdown of the Level for individual scorecard sections. The improvements enhanced further canbe if PLCs provide more from 2012 to 2015. These improvements are recognized strengths as in the 2015 ACGS assessment practices and improved disclosures have also contributed to the continued increase in average score regulations. In addition, PLCs’ own aspiration in pursuing and efforts corporate better governance practices. This comes against the backdrop of ongoing developments in Singapore corporate governance illustratedAs in Figure 41, many PLCs have improved their disclosures on corporate governance Scores by Component 2015. School Business Singapore Sources: ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Singapore Institute of Directors and Centre for Governance, Institutions and Organisations of the National University of of University National the of Organisations and Institutions Governance, for Centre and Directors of Institute Singapore

Number of Companies Organisations of the National University of Singapore Business School 2015. School Business Singapore of University National the of Organisations Sources: Figure 41: Singapore—Total Score Distribution for 2015 . – . Singapore Institute of Directors and Centre for Governance, Institutions and and Institutions Governance, for Centre and Directors of Institute Singapore Table 17: . – . 2014 2012 2015 2013 Year Singapore—Level 1Scores, 2012–2015 . – . . Score Range . – Level 1Score (out of 100) . – . Average 56.4 67.0 74.6 65.1 . . –

. – . . – . Singapore 65 . . ( points) of the Board . Part E: Responsibilities Part . Reports and Assessments and Reports . ( points) . and Transparency Part D: Disclosure Part . . ( points) Shareholders Part C: Role of C: Role Part . . . eatment of ( points) Tr Shareholders . Part B: Equitable Part Singapore—Scores of Individual Part of Level 1, 2013–2015 Level of Part Individual of Singapore—Scores . . 42: Figure Shareholders . Part A: Rights of Part (max. points)

Singapore Institute of Directors and Centre for Governance, Institutions and Organisations of the National University of

Mean Score Mean Shareholders of Singapore incorporated companies have extensive participation and protection rights. protection and participation extensive have companies incorporated Singapore of Shareholders These rights are clearly defined in the Companies Act. Fundamental safeguarding mechanisms have among in, participate to right shareholders’ as Act so ensure to Companies the into been embedded This shares. new of as as authorization well constitution company the of amendment the things, other This law. by with comply has to company every that items default 20 the of out nine includes section framework. regulatory shareholders’ rights enshrined how in Singapore’s are demonstrates bolster to framework the in further changes Act initiated Companies the in amendments recent The approval 2016, of first quarter the from effective certain exceptions, to Subject shareholders. of role the of event the in directors executive to given compensation for shareholders from be obtained to needs new introduced has also SGX amendments, legal the to addition In employment. from termination requirement listing this of Reviews PLCs. the for Singapore in meetings general in voting poll on rules voting. poll corporate adopted have who companies of number the increased have in proceedings relevant in shareholders engage to companies require provisions Act’s Companies The all of results voting the publicly available make to required also are PLCs Singapore manner. timely a were companies the all for AGMs recent most The next day. the by resolutions meeting general their each for explanation and rationale the providing PLCs most with locations, very accessible in held also disclose to on: improve should PLCs that areas twokey are there However, AGM. the in item agenda and results resolution AGM validate to party as a scrutinizer independent was an appointed whether members, board chairperson, the of attendance include which meetings of minutes detailed provide to weaknesses, These proceedings. meeting the during answers and questions as as the well CEO, and adopting in more do to PLCs need for the to pointing years, past few the for persisted have general, in these practices. Sources: Sources: Singapore Business School 2015. Shareholders Rights of A: Part Singapore 66 by the law. Since these are of statutory part and regulatory requirements, all the PLCs strictly adhere and CEOs (who may not directors) be must also disclose their dealings in company shares required as or conflict of interest on the of key part executives and directors is mandatory. Company directors In the overall Singapore corporate governance framework, timely disclosure of material information the markets. Notwithstanding that, SGX does not allow PLCs to list dual class voting shares presently. share-class rights amendment is intended to give greater flexibility to PLCs in raising capital through ordinary shareholders. Moreover, given the increasingly complex demands by PLCs to raise capital, this unique feature of dual class shares is that it protects entrepreneurial management from the demands of Companies Actreform, companies will now able be to shares offer with multiple voting rights. The each Singapore PLC ordinary shareholder is entitled to one vote share. per However, in the recent fundamental right of shareholders on the based been one-share–one-vote has principle. such, As Singapore’s legislation treatment places the equitable on strong The emphasis of shareholders. Part B:Equitable Treatment of Shareholders 2015. School Business Singapore Sources: company. listed PLC =publicly meeting, general AGM =annual ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Figure 43:Singapore—Strengths andAreas for Improvement inRightsof Shareholders Singapore Institute of Directors and Centre for Governance, Institutions and Organisations of the National University of of University National the of Organisations and Institutions Governance, for Centre and Directors of Institute Singapore • • • A • • • T • • S treng reas Few PLCs record in questionsthe answers AGM and minutes. chairman ofchairperson, chief and the audit executive committee, officer. Few PLCs disclose the AGM including attendance of that board members, of the validate votes at AGMs. is to appointed Few count and/or PLCs party disclosed independent an whether recent AGM allowed and voting in absentia. PLCsMost vote by (as poll to ashow opposed of hands) for all resolutions at the most statement. shareholders’ approval in the notice of the circulars, AGM, and/or the accompanying PLCsMost provide the rationale explanation and for each item that agenda required takeovers. acquisitions,conditions of and/or substantial of mergers, the transactionin cases to evaluate of the the fairness terms party and independent an board appoints The PLCsAll organize their recent most AGM in easy-to-reach an location. during the recent most AGM for all resolutions. PLCsAll are publicly available working day by the next the result of the votes taken

for h s I mprovement Singapore 67

Reports and Assessments and Reports of Shareholders of mprovement I s h for

More PLCs should provide a detailed provide dividend should policy. PLCs More and a policy members board requiring (directors have should PLCs More on a particular discussion board the in abstain to from participating commissioners) agenda present. is when a conflict interest of All PLCs do not have bundling of items in resolutions for AGMs. AGMs. for resolutions in items of bundling have do not All PLCs party related of and value as transactions as nature well the policies disclose All PLCs procedures. and approval from benefiting information from insider prohibited are All directors and employees market. the to generally available not 3 business within report shares to All required dealings company in directors their are days. final for dividends. payable amount the disclose Most PLCs proxy the documents easily make available. Most PLCs reas treng • A • St • • • • • • Singapore—Strengths and Areas for Improvement in Equitable Treatment Treatment in Equitable Improvement for and Areas Singapore—Strengths Singapore Institute of Directors and Centre for Governance, Institutions and Organisations of the National University of Figure 44: Figure AGM = annualAGM general meeting, = publicly PLC listed company. Sources: Singapore Business School 2015. to timely disclosures and seven out of 20 assessment scores cover the section on interested party interested on section the cover scores assessment 20 of out seven and disclosures timely to transactions, insider trading, and dealing in company shares. has been persistent there and section this in performed very well generally have PLCs Singapore detailed included PLCs most by submitted notices AGM The score. the in improvement year-on-year of number A significant policy. dividend and appointments, auditors’ profiles, directors’ on information an in circulars and notices AGM the in reelection seeking directors of profiles the featured also PLCs companies Many shareholders. the with beforehand information complete and relevant effort share to length. arm’s at and fairly party transactions interested conducting of policy the disclosed also should PLCs Specifically, go. to way some have still PLCs where areas of a couple however, are, There in participating from abstain to members board requiring a policy place in have they whether disclose members board these for interest of a conflict poses agenda the where situations in discussions board to measures take should PLCs length. arm’s at and fairly been conducted have RPTs whether and as as to well matters board on making decision objective ensure to order in issues these both address transparency. offer greater Singapore 68 Integrated Reporting Council model framework in 2015. an integrated reporting standard for the PLCs. However, only one company adopted the International The Institute of Singapore Chartered Accountants also has set up asteering committee to advocate for Commission spearheaded has this initiative by providing guidelines on integrated reporting to the PLCs. Singapore PLCs are also encouraged to move toward integrated reporting. The Singapore Accountancy corruption. on the process of supplier and contractor selection. PLCs should also make public their policies against employee welfare and training programs. However, companies still to need provide more information chain environment-friendly increased has in the year. past PLCs have also disclosed more details on The number of PLCs reporting to interact their efforts with the communities and to keep their value Singapore PLCs. thatfact Global 100, an index of the 100 most sustainable corporations in the world, included four to adopt acustomized form of reporting. Increased adoption of these standards is reflected by the have adopted the Global Reporting Initiative G3.1 standards, or G4 while other PLCs have chosen section in the annual or report have released aseparate sustainability Leading report. companies In this year’s assessment, most of Singapore’s top 100 companies have either included asustainability stakeholder matters. is still much room for improvement on the of PLCs part in providing detailed disclosures related to issues, such environmental as and social of their part factors,as strategy formulation. However, there Additionally, the Singapore corporate governance framework requires boards to consider sustainability 4 on itsproposal in January 2016 well the as as content of the sustainability reporting rules and guide. with the guidelines or account for any lack of adherence to the guide. SGX issued aconsultation paper PLCs are encouraged to adopt the guidelines. Moving forward, SGX will require PLCs to either comply and 2011 in by SGX, issued was guide reporting sustainability A reporting. sustainability on policy its disclosure practices. With emphasis on stakeholder engagement for PLCs, SGX recently has reviewed Singapore PLCs are looking forward to actively communicating with stakeholders through various Stakeholder engagement is one of the major strategic points for thriving businesses. In line with this, Part C:Role of Stakeholders

31 December 2017, withreports publishedfrom 2018. SGX expectsthenewrulesandguide onsustainability reporting to applyto companies from thefinancialyear-ending onorafter ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 4

Singapore 69 Reports and Assessments and Reports mprovement I s h for

More PLCs can disclose their supplier and contractor selection and contractor supplier and their criteria. can disclose PLCs More antibribery their public policy can make and and anticorruption practices. PLCs More reports. reporting annual their in integrated can introduce PLCs More More PLCs reported efforts PLCs their More their keep and to communities the with interact to environment-friendly. chain value existence effortstheir and the scope of stipulated customers’ PLCs More address to welfare. policies and development welfare employee details their of disclosing are PLCs More and measures. for programs and development on training information relevant published PLCs More its employees. policy place. in whistle-blowing a comprehensive have Most PLCs reas treng • • A • St • • • • • Singapore Institute of Directors and Centre for Governance, Institutions and Organisations of the NationalUniversity of Singapore—Strengths and Areas for Improvement in Role of Stakeholders of Role in Improvement for and Areas Singapore—Strengths 45: Figure Part D: Disclosure and Transparency Disclosure D: Part very important for is operations business in transparency and public the to information of Disclosure also but stakeholders the to better information provide only not domain this in Best practices PLCs. business. their conduct PLCs way the in confidence investor improve general, in have, scores the and transparency, of terms in performed well PLCs Singapore whole, On the on statements financial quarterly reported PLCs All 100 last year. to as upon compared been improved their of trading the disclosed PLCs most fees. Additionally, nonaudit and audit their shared and time The indicators. performance financial company’s the provided also and employees company by shares channels various used PLCs the since diverse also were companies most for disclosure of methods disseminate to others) briefings, among media and analyst and websites, reports, company (annual of shareholdings indirect and direct the disclosed also companies More public. the to information corporate detailed their reported companies of number increasing an Also, management. senior noncompliance. cases in of accountability reports with annual in statement compliance governance robust a more toward move to order in disclosures their furtherimprove can,however, PLCs The 60 within be released should instance, for statements, financial audited The transparency. of culture meetings general of minutes make should PLCs all Additionally, year. financial of end the from days nonfinancial their disclosing into look also should PLCs disclosures. greater effort an in toward public websites. reports company and annual in policy dividend as as their well indicators performance PLC = publiclyPLC listed company. Sources: Singapore Business School 2015. Singapore 70 structure that deals with the board members and senior executives. Effective 2015, there is no longer New amendments in the Companies Acthave introduced additional measures to the governance systems. management statement by their boards or audit committees on the adequacy of the their internal controls and risk of one, have an internal audit function in place. In addition, companies’ annual contain reports a committees with amajority of independent directors. Allthe Singapore PLCs, with the exception well on scores related to board responsibilities. For instance, more PLCs have boards and board shareholders. This emphasis is rightly echoed by the Singapore PLCs, since they generally perform matters related to nomination, remuneration, audit and accountability, and communication with Companies to need comply with or explain any deviation from the guidelines of the code which cover The Code of Corporate Governance in Singapore puts significant emphasis on board responsibilities. Part E:Responsibilities of theBoard 2015. School Business Singapore Sources: company. listed PLC =publicly overall. reporting with improved disclosure methods, canalso adhere better to the corporate governance framework and boost confidence in their business dealings. These measures toward increased transparency, combined They should more be transparent by disclosing the nature and value of each significant in RPT order to Figure 46:Singapore—Strengths andAreas for Improvement inDisclosure andTransparency ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Singapore Institute of Directors and Centre for Governance, Institutions and Organisations of the National University of of University National the of Organisations and Institutions Governance, for Centre and Directors of Institute Singapore • • A • • • • T • • • S treng reas More PLCs make can annualmeeting minutes general public. in annual reports. More PLCs disclose indicators policy can their and dividend nonfinancial performance PLCsMost indicators. provided financial performance commissioners. and directors PLCsMost disclosedof remuneration details of each of the member boards of company briefings. media and websites,analyst and reports, PLCs theirMost disclosures released of through channels annual such avariety as PLCsMost disclosed trading in company shares by insiders. PLCsMost made public the materials and media. to analysts provided in briefings PLCs reporting. All quarterly practiced PLCsAll disclosed their audit nonaudit and fees.

for h s I mprovement Singapore 71

Reports and Assessments and Reports of the Board of mprovement I s h for

PLCs should disclose more details on their remuneration policies and practices. policies details remuneration their more on disclose should PLCs directors. individual of evaluation on the disclosure provide should PLCs More All PLCs clearly stated the roles and responsibilities for the chairperson of and the board for and responsibilities stated roles the clearly All PLCs reference. of terms directors their in a majority had independent of Most and directors committees. on boards PLCs diversity a board with director policy had least at Most with PLCs one nonexecutive industryrelevant experience. adequacy committee on the or audit of board the by disclosure provided Most PLCs management and risk systems. controls internal reas treng • • St • • • • A Singapore—Strengths and Areas for Improvement in Responsibilities in Responsibilities Improvement for and Areas Singapore—Strengths 47: Figure Singapore Institute of Directors and Centre for Governance, Institutions and Organisations of the National University of Scorecard Level 2 scores comprise bonus and penalty points as an additional layer on top of Level 1 Level of top on layer as penalty additional points an and bonus comprise 2 scores Level Scorecard best practices adopting of forefront the at are they if points bonus awarded generally are PLCs scores. committed have or behind lag significantly that PLCs Similarly, framework. as governance part the of PLC = publiclyPLC listed company. Sources: Singapore Business School 2015. Bonus and Penalty a maximum age limit for directors and the disclosure requirements of RPTs previously specific to the the to specific previously RPTs of requirements disclosure the and directors for limit age a maximum to be required will CEOs that means This directors). not are (who CEOs be extended to will directors own their in shares of ownership or transactions business in interest of conflicts potential any disclose corporation. or related another company provided have companies More 2014. from scores their improved significantly have Companies include disclosures The directors. new selecting for used criteria and process the on disclosures commitment, competencies, director’s each and board the of renewal progressive and composition least once at reelection to subject are PLCs the of most in Directors performance. and contribution, 3 years. every independent appoint need to companies more be taken: to measures additional still are there However, public provide conduct, or ethics of code their of implementation and details disclose chairpersons, assessments, as well director and board conducting of process and criteria detailed of information these on disclosures detailed Further, business. the risks in key managing of process as the identify being are functions corporate and transactions business the aspects how on offer a better view will company. the of echelons top the in conducted Singapore 72 level of transparency and disclosures. PLCs have to move in step by adopting the enhancements in the framework in order to maintain ahigh However, SGX does not currently allow dual class shares in their PLCs. In this dynamic environment, amendments to the Companies Actwhich now allows Singapore companies to issue dual class shares. that have made been to the corporate governance framework of the part SGX as review well as as Furthermore, corporate governance is an ever-evolving framework evident as from the changes sustainability. to give aholistic and integrated representation of their performance, both in terms of finances and provide more comprehensive disclosures. One way is to adopt integrated which reporting, allows PLCs Companies should also make public their AGM and extraordinary general meeting minutes well as as of their board details members, of their dividend policy, and the criteria for their supplier selection. conduct business without any loss of momentum. More PLCs should disclose the AGM attendance Nevertheless, PLCs to need continue their move toward increased transparency in the way they transparentbeen on the process and criteria of new directors’ selection. Code of Corporate Governance and the explanations for noncompliance. More companies have also on insider trading policies, shareholdings by senior management, well PLCs’ as as compliance with the well higheras as scores in every section of Level 1. PLCs have increasingly providing started more details Overall, Singapore PLCs have improved their scores in 2015, evidenced as by the overall average scores Conclusions andRecommendations of board seats an individual may hold. effectively on the respective boards, companies should determine and disclose alimit on the number than five directorships in listed companies. To ensure that directors have the time and energy to serve for having appointed independent directors, i.e., “busy” and nonexecutive directors holding more a lack of attention on board renewal and succession companies planning. received Last, points penalty some instances, the chairperson the been has company CEO in the 3 years. last These factors suggest some PLCs had independent directors for serving more than 9years in the same capacity. Also, in Companies received points penalty on matters related to board composition and responsibilities, i.e., year-end and by releasing their AGM notices at 28 least days before the meeting. their scores by further releasing their audited annual financial within reports days 60 from the financial companies disclosed details on the remuneration of their CEOs. Companies however, can, improve with board-nominating committees comprising entirely of independent directors. Additionally, more transparency and responsibilities of the board. There an increase was in the number of companies Singapore PLCs in general had improved bonus points in several sections, especially on disclosure and process. violations of laws and policies in the governance domain are penalized of the part Level as 2scoring ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Singapore 73 Reports and Assessments and Reports Name Nam Cheong Nam Bumitama Agri Bumitama Del Monte Pacific Monte Del Shipbuilding (Holdings) Yangzijiang Ho Bee Land Ho Sarine Technologies Sheng Siong Group Olam International Olam United Overseas Bank Overseas United UOL Group United Engineers United Indofood Agri Resources Indofood Industrial United Finance Leong Hong Management ARA Asset Holdings Eastern Great Resources First Holdings Estate Real Perennial Venture Gallant Noble Group Noble Biosensors International Group International Biosensors Roxy-Pacific Holdings Roxy-Pacific 31 41 37 33 35 27 32 47 39 36 38 OUE 34 Venture 45 43 26 29 28 42 46 49 48 44 30 M1 50 40 Rank Name a SATS Keppel Land Keppel Tiger Airways Holdings Airways Tiger SIA Engineering Singapore Exchange Singapore Holdings Press Singapore Post Singapore CapitaLand Neptune Orient Lines Orient Neptune Sembcorp Marine Sembcorp Fraser and Neave Fraser Global Logistic Properties Global Logistic City Developments Singapore Technologies Engineering Technologies Singapore Industries Sembcorp SMRT & Transportation Telecommunications Keppel Singapore Telecommunications Singapore Holdings DBS Group Yoma Strategic Holdings Strategic Yoma Oversea-Chinese Banking Singapore Airlines Singapore Singapore—Top 50 Publicly Listed Companies Based on 2015 Total Score Total Based on 2015 Companies Listed 50 Publicly 18: Singapore—Top Table Singapore Institute of Directors and Centre for Governance, Institutions and Organisations of the National University of 1 7 3 5 2 6 9 8 4 11 17 13 15 21 12 StarHub 16 19 14 Keppel 18 10 23 25 ComfortDelGro 22 24 20 O corporate governance review. This ranking table is based on information disclosed as of 31 July 2015. Rank Januaryn 19 Singapore 2016, Post Limited provided an update to its shareholders on the conduct of aspecial audit and a Sources: Singapore Business School 2015. Thailand

Background of the Corporate Governance Framework Publicly listed companies in Thailand are primarily governed by the Public Limited Companies Act, Securities and Exchange Act, and the Civil and Commercial Code. These laws have provided a strong foundation, institutional setting, supervisory framework, and enforcement rules for the Thai capital market.

The secondary level of regulatory requirements governing corporate governance practices in Thailand consists of the listing rules by the Stock Exchange of Thailand and regulatory notifications by the Securities and Exchange Commission (SEC).

The tertiary level of corporate governance is the Code on Corporate Governance in which publicly listed companies (PLCs) must observe a “comply or explain” basis. The Stock Exchange of Thailand initially issued the 15 Principles of Good Corporate Governance in 2002, which was then amended in 2006 into the Principles of Good Corporate Governance for Listed Companies. The 2006 principles were revised again to accommodate recent developments and were reintroduced to Thai listed companies in January 2013 to further ensure sound corporate governance practices.

Since 2001, the Thai Institute of Directors has been objectively assessing the corporate governance practices of Thai listed companies on a regular basis, resulting in the Corporate Governance Report of Thai Listed Companies. A major goal of the report is to encourage Thai listed companies to strive toward international best practices of corporate governance. The Corporate Governance Report assessment framework was initially based on the Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance and has been periodically updated as deemed appropriate. The most recent revision was in 2014 corresponding to the Association of Southeast Asian Nations (ASEAN) Corporate Governance Scorecard (ACGS) to further ensure that PLCs comply not only in form but also in substance.

In October 2015, the SEC, OECD, the Stock Exchange of Thailand, and the Institute of Directors, with support from the Government of Japan organized the 2015 Asian Roundtable on Corporate Governance in Bangkok. The participants were top executives and representatives from the government and private sectors. There were over 150 domestic and foreign participants. The aims were to promote the development of good corporate governance in the region and disseminate the new corporate governance principles by OECD.

In 2015, the SEC, the Thai Institute of Directors, and the Thai Listed Companies Association convened a meeting to discuss the development of the New Corporate Governance Code for Thailand. A review put emphasis on the role of the board of directors in incorporating corporate governance into the

74 Thailand 75 Reports and Assessments and Reports 61.39 2015 87.53 110.70 2014 62.68 84.53 104.60 ormance erf P Score Thai Institute of Directors 2015. Thailand—Overall Performance in 2014 and 2015 Performance 19: Thailand—Overall Table Minimum Average Maximum Source: Source: verall and Category and Category verall O from 3 points by increase an 2015, in points 87.53 is companies listed Thai of score average overall The 2014. in points 104.60 with as points compared 110.70 is maximum score The 19). (Table 2014 in scores average in improvement an showed companies listed Thai category, each in scores the For its average in a drop showed category Shareholders of Rights The 20). (Table category one but all entered that companies of minutes (AGM) meeting general annual English missing the to due score the in a decline caused minutes AGM of lack The 2015. in first time the for sample assessment the document AGM the Since results. overall the of score minimum the and category the of score average the that recommended is it practices, Shareholders of Rights the of assessment the in essential is companies notices the make and English AGM minutes publicly available. increase a 10% showing improvement, most the exhibited average on category Stakeholders of Role The Responsibilities Board and Transparency and Disclosure the by was followed This score. average its in scores. average in increase a 5% with both categories, Overall Analysis Overall market whose companies 100 of practices governance corporate assessed the ACGS 2015 The available reports were annual whose and 2015 as 31 March of 100 top as the ranked were capitalizations 2014 from item additional one with criteria, assessment 212 were There websites. their on English in category. Shareholders of Treatment Equitable the from business operations by underlining social and environmental sustainability. It is still a work in progress progress in a work still is It sustainability. environmental and social underlining by operations business writing. of time the at Thailand 76 improve the corporate governance practices of financial companies services is recommended. score in 2014 and 2015, but showed no observable improvement. Thus, more encouragement to assessment for the time. first Note that the financial sector services exhibited a relatively high average average performance due to the missing English AGM minutes of anew company entering the 2015 Technology Telecommunications and sector. health group care The showed the greatest decline in energy and utilities, and financial The most sectors. services improved average performance the was ormance by Both in 2014 and 2015, the top three industry groups were the technology and telecommunications, P only five companies in 2014. governance practices, evidenced as by 15 companies in the 100-or-above score range in 2015 versus 2015 (Table 21). In general, Thai listed companies have demonstrated an improvement in corporate ormance by Score theOf 100 sample companies, the majority of Thai listed companies are in the 90–99 score range in P Source: ( )=negative. Part 1 only) Score (Level Average erf erf ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Thai Institute of Directors 2015. Directors of Institute Thai Table 21:Thailand—Performance by Score Intervals in2014and2015 % Change Table 20: 2014 2015 Year Source: Total Companies 60–69 70–79 80–89 90–99 100 andupper Range of Score Thai Institute of Directors 2015. Directors of Institute Thai Shareholders Thailand—Performance by Categories in2014and2015 Rights of I ndustry Gr (1) 9.06 9.19 R ange Shareholders Treatment of Equitable 14.75 14.51 2 oup 2014 100 29 32 31 5 3 Number of Companies Stakeholders Role of 10 .920.07 8.09 7.38 Disclosure and 100 2015 Transparency 30 24 24 15 7 19.06 5 Responsibilities 28.35 29.68 Board 5 Thailand 77 73.00 85.51 92.50 84.06 101.35 2015 Score 2 9 Reports and Assessments and Reports No. ofNo. Companies Average 2015 Score 4 62 24 No. ofNo. Companies Average 75.43 79.56 97.45 85.10 85.10 10 91.55 89.15 82.25 2014 Score 3 9 11 91.22 10 98.30 17 81.47 18 83.65 17 82.31 12 82.53 15 83.42 16 84.25 12 90.97 14 90.87 16 86.23 19 91.47 No. ofNo. Companies Average 2014 Score 3 13 21 63 No. ofNo. Companies Average (B million) Thailand—Performance by Market Capitalization in 2014 and 2015 Capitalization Market by Thailand—Performance Range of Market Market of Range Thai Institute of Directors 2015. Capitalization Capitalization Thailand—Performance by Industry Group in 2014 and 2015 in 2014 Group Industry by 22: Thailand—Performance Table 600,000–1,000,000 100,000–599,999 60,000–99,999 10,000–59,999 Source: Source: Thai Institute of Directors 2015. Table 23: Table Technology and Telecommunications Technology Industry Group Industry Energy and Utilities Energy Financials Industries Consumer Services Property Consumer Goods in 2014 Country Report Consumer Goods in 2014 Country Health Care Health Source: erf This section has classified listed companies into four groups. The first group includes companies with with companies includes first The group groups. four into companies listed has classified section This Companiesa large market million capitalization companies). (four of B600,000 million–B1,000,000 second the form companies) (24 million million–B599,999 B100,000 of capitalization market a with million–B99,999 B60,000 of capitalization a market with companies represents group third The group. B10,000 of capitalization a market with companies contains group smallest The (10 companies). million companies). million (62 million-B59,999 market their by companies of performance governance corporate the shows 23 below Table On the scores. average the higher the capitalization, market the higher the general, In capitalization. million–99,999 60,000 the in Companies size-groups. all in has been improvement an there average, million baht exhibited size-group the most improvement. P Capitalization Market by ormance Thailand 78 Source: meeting. general AGM =annual in 2014 in 2015. to 40% directors. Nonetheless, the proportion of companies earning ascore in this item increased from 27% there are other addition (in benefits to the regular retainer meeting fees, allowance, and bonuses) for remuneration approval forshareholders’ at Specifically, the AGM. they should indicate not or whether A suggested area for improvement is for Thai listed companies to propose all forms of director AGM minutes in English on which several assessment criteria were (Figure 48). based scores in these criteria declined because the new companies in the 2015 sample did not disclose their attention to the rights of shareholders at the AGM. However, the percentage of Thai companies earning AGM resolutions. These aforementioned governance practices imply that the listed companies paid voting and vote tabulation procedures before the AGM well adisclosure as as of the vote by poll for all AGM and recorded the questions and answers in the AGM minutes. There adiscussion was of the 9.19 points in 2014. Most companies provided opportunities for shareholders to questions ask at the The average score in the rights of shareholders category is 9.06 points in 2015, aslight decline from dividends, participate in the AGM, the and elect directors, among others. facilitated. Shareholders should able be to exercise their ownership rights, including the right to receive rights in itsbusiness Awell-governed affairs. must firm ensure that shareholders’ rights are well The rights of shareholders category aims to whether assess the company recognizes the shareholders’ Part A:Rightsof Shareholders ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Figure 48: Thai Institute of Directors 2015. Directors of Institute Thai Thailand—Strengths andAreas for Improvement inRightsof Shareholders • A • T • • S treng reas the AGM. forms ofAll directorremuneration for proposed shareholders’ shouldapproval be in discloseCompanies that are all questions answers recorded and in the AGM minutes. questions. shareholders to ask discloseCompanies that the AGM minutes show for that there is opportunity an hands) for all resolutions at the recent most AGM. the vote well as as before by the (as meetingpoll proceeds, to ashow opposed of discloseCompanies voting vote and tabulation declaring procedures both used,

for h s I mprovement Thailand 79

Reports and Assessments and Reports of Shareholders of s h Companies disclose information about date of first appointment and directorship(s) first of and directorship(s) appointment about date information Companies disclose seeking individuals of listed election companies director publicly or reelectionin other general call meeting. annual the to notice the in annual call the to notice the in and dividend provided are Details auditor the of general meeting. the The in final dividend for dividends disclosed policy are payable amount and the general meeting. annual call the to notice treng St • • • Thai Institute of Directors 2015. Thailand—Strengths and Areas for Improvement in Equitable Treatment Treatment in Equitable Improvement for and Areas 49: Thailand—Strengths Figure The role of stakeholders principle concentrates on the issue of corporate social responsibility to all all to responsibility social corporate of issue the on concentrates principle stakeholders of role The in activities company’s the through responsibility corporate encourage to is goal The stakeholders. communities, employees, partners, competitors, business consumers, environment, the to relation practices and policies company’s the examines category This stakeholders. other and creditors, stakeholders. its related of treatment and acknowledgement the to pertaining Source: Stakeholders of C: Role Part The equitable treatment of shareholders addresses whether minority (noncontrolling) shareholders whether shareholders addresses minority of The equitable (noncontrolling) treatment example, for process, AGM The shareholders. controlling the alongside equally and fairly treated are Also, complexity. undue without meeting the in participate to shareholders all enable should controlling the by as tunneling such actions possible from be protected should shareholders outside related and information nonpublic material of use the through indirectly or directly acting shareholders party transactions (RPTs). the since category shareholders of treatment equitable the in well done have companies listed Thai higher is which points, 14.75 is 2015 in score average The assessment. ACGS the of commencement 2014. in points 14.51 than e.g., information, Important AGM. the call to notice the is companies listed Thai of strength The the in was available consideration shareholders’ for payment, dividend and auditors of appointment with directors candidate on information was the improvement An obvious AGM. the call to notice proportion The companies. listed other in directorship and first appointment their of date the to respect 49). (Figure 2015 91 % in to 2014 68% in from increased criterion this in a score earning companies of Part B: Equitable Treatment of Shareholders of Treatment B: Equitable Part Thailand 80 Source: of companies earning scores in these areas are not high, the visible improvement is encouraging. individual who reveals illegal and/or unethical behavior from retaliation. Even though the percentages short-term and long-term corporate performance; and policy or procedures to protect an employee or statistics on employees’ health, safety, and welfare; compensation policy for employees linked to governance practices pertaining to the supplier selection procedures; protection of creditor’s rights; There is still room for improvement, however. Thai listed companies should fully disclose their from 58%to 85% (Figure 50). programs marked was by an increase in the percentage of companies earning ascore in this criterion and the environment. Asignificant improvement in the companies’ practices in anticorruption a majority of companies disclosed apolicy on and practices dealing with the customers, communities, separate sustainability or report included a corporate responsibility section in their annual and report, The most observed governance practices in this category were that almost all companies published a score is 8.09 points in 2015, an increase of 10% from 7.38 points in 2014. apparentAn improvement is observed for the Role of Stakeholders category in 2015. The average ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Thai Institute of Directors 2015. Directors of Institute Thai Figure 50:Thailand—Strengths andAreas for Improvement inRole of Stakeholders • • • • • • A • T • • • • S treng reas Policies relating to reward orcompensation for employees disclosed should be clearly. and/or unethical behavior fromretaliation disclosed. should be orprocedures to policy employeeThe protect an or individualreveals who illegal unethical behavior disclosed. should be Procedures for dealing with complaints by employees concerning illegal and/or clearly, including evidence. actual Information relating to employees’ safety, health, welfare and disclosed should be Practices dealing with creditors’ disclosed should rights be clearly. disclosed should be Practices dealingclearly. with supplier selection There are clear practices onanticorruption programs procedures. and There are clear with activities regard to environmental sustainability. There are with activities regard to communities. There are clear practices dealing with customers’ welfare. in the annualThere is orsection aseparatereport. corporate responsibility report

for h s I mprovement Thailand 81 Reports and Assessments and Reports mprovement I s h for

The corporate group structure is disclosed. is structure group The corporate The policy party on related disclosed. is transactions RPT disclosed. party is each for related the The name of and relationship RPT disclosed. is each of and value The nature report. annual the in directors meetings in disclosed is The details attendance each of stated directors the are in of board member the of each of The details remuneration of annual report. clearly. Direct more be directors should disclosed and of indirect shareholdings Direct senior management more be and of indirect should disclosed shareholdings clearly. performance inCorporate and objectives be nonfinancial should disclosed indicators report annual the first of listed companies,Directors’ appointment, other in date and training directorship clearly more be should disclosed year obtained financial and most education recent the in report. annual the in reas treng • • • • • A • • • • St • Thai Institute of Directors 2015. Thailand—Strengths and Areas for Improvement in Disclosure and Transparency in Disclosure Improvement for and Areas 51: Thailand—Strengths Figure RPT = related party transaction. Source: The disclosure and transparency principle contemplates the accuracy, completeness, and punctuality punctuality and completeness, accuracy, the contemplates principle transparency and disclosure The in a information corporate material Companies disclose should disclosure. information corporate of relevant and interested all reach to channels of variety a through manner cost-effective and timely all are information nonfinancial and financial and RPTs, structure, ownership parties. firm’s The significant items to disclose. higher is which 2015, in points 20.07 is category Transparency and Disclosure the in score average The nonfinancial disclose to willing were companies listed Thai more general, In 2014. in points 19.06 than information to the public. and policy the disclosed companies listed Thai most fact that the in lies category this in strength The the and director, each of records attendance meeting structure, group corporate RPTs, their of details report (Figure 51). annual the in director each for remuneration board the of details Part D: Disclosure and Transparency and D: Disclosure Part Thailand 82 to 2014, the percentages of companies earning scores in 2015 show an upward trend. but also of individual directors, and annual performance evaluation of the board committees. Relative long-term corporate performance, annual performance assessment not only of the board of directors directors, state aremuneration policy for executive directors and the CEO linked to short-term and at two-thirds least for board decisions, decide on apolicy on the term limit of 9years for independent implementation of the corporate strategies, set apolicy on the requirement of aminimum quorum of The board of directors should review the vision and mission statements every year and ensure the place, and of the annual performance assessment of the board of directors (Figure 52). continuous professional education programs, of an effective internal control and risk management in for the appointment of new directors, of apolicy that encourages directors to attend ongoing or effective implementation and monitoring of the code, and that there were disclosures of the process management, and employees were required to comply with the code of conduct, together with the of the stated corporate governance policies. Encouraging practices were that all directors, senior 2015. The board of directors of Thai listed companies put more emphasis on the implementation The average score in this category increased by 5%, from 28.35 points in 2014 to 29.68 points in evaluation, and search process and evaluation of the CEO, among others. proceduresreports, for director nomination, orientation of new board board members, performance operations, apledge of transparent business practices, the presence of proper financial controls and This category the assesses development of the corporate strategy, monitoring of the business managerial performance, and preventing conflicts of interest. fulfill their responsibilities. The board is mainly responsible for guiding corporate strategy, monitoring stakeholders, the board of directors must apply high ethical standards to the business to effectively of directors to the shareholders and other stakeholders. By taking into account the interests of all The responsibilities of the board focus on the duties, responsibilities, and accountabilities of the board Part E:Responsibilities of theBoard in these areas are not high, the visible improvement is encouraging. disclosed in the annual well. as Again, report though the percentages of companies earning the scores nonlisted companies), and training and education obtained in the most recent financial year should be date of appointment, first directorship in other listed companies (showing separately the listed and performance indicators (e.g., the company’s market share). The information for each director on the shareholdings of directors and senior management and of the corporate objectives and nonfinancial forAreas improvement for Thai listed companies are the disclosure of the direct and indirect ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Thailand 83 Reports and Assessments and Reports mprovement I s h for

Companies should state that the board of directors reviewed the vision and vision mission the directors reviewed of board the Companies state that should last the in year. strategy financial the and oversees directors monitors of board the Companies state that should strategy. corporate the of implementation least at of requirement quorum Companies policy set should the minimum on the decisions. board for two-thirds independent for 9 years Companies policy set of should the term limit on the directors. performanceThe annual assessment be directors individual should stated of clearly. performanceThe annual assessment directors committees be of board should the of stated clearly. clearly. be should disclosed directors and CEO policy executive for The remuneration Companies disclose that all directors, all senior that management, Companies are disclose and employees and the implementation the code. the with also disclose They comply to required or conduct. ethics code of the of monitoring directors. new of appointment the for process the Companies disclose and risk. control internal the of a review The provides board or continuous attend encourages a policy ongoing directors to that Companies have programs. education professional Companies conduct performance an annual assessment directors. of board the of reas treng • • • • • • A • St • • • • • Thailand—Strengths and Areas for Improvement in Responsibilities of the Board of in Responsibilities Improvement for and Areas Thailand—Strengths Thai Institute of Directors 2015. 52: Figure Bonus and Penalty items bonus the of purpose The section. this in separately discussed are penalty criteria and bonus The as required practices governance corporate minimum the beyond go that companies recognize to is that violations or practices governance with companies for recorded a penalty is contrast, In 1. Level in paradigm. governance corporate good the of pale the beyond are Source: Thailand 84 Continuous Improvement in Corporate Governance Practices Conclusions andRecommendations Source: to the board of directors is recommended. use of professional search firms or other external sources of candidates when searching for candidates a process of identifying the quality of directors, which aligns with the company’s strategic direction. The board beyond 9years from the date of appointment. first Also, the board of directors should undertake However, Thai listed companies should conduct an assessment of any director on the whoserved has statements within days 60 from the financial year-end. notice of meeting at 28 least days before the date of the meeting and distributed their audited financial listed companies provided their shareholders enough time to prepare for the AGM by releasing the Figure 53 shows the strengths and areas for improvement in the bonus Most and areas. Thai penalty ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 • • Thai Institute of Directors 2015. Directors of Institute Thai Figure Thailand—Strengths 53: andAreas for Improvement inBonusandPenalty of directors. Companies, large or small and newly listed or long-standing, are encouraged to programs, implementation of the code of ethics, and performance evaluation of the board and practices not only in form but also in substance. are Examples the anticorruption Thai listed companies have stressed the importance of their corporate governance policies improvement. most in 2015, which is 3 points higher than in 2014. The Role of Stakeholders category exhibits the improvement in good corporate governance practices. The overall average score is 87.53 points The 2015 assessment shows that Thai listed companies have exhibited continuous • • • A T • • S treng reas candidates searching when for candidates to (Bonus) the board of directors. should professional use Companies sources search of orother external firms (Bonus) of with aligned the directors quality company’sof identifying strategic directions. Companies should disclose that the nominating the process committee undertakes have who directors forThere are more independent than (Penalty) 9years. served financial year-end. (Bonus) within 60 days is released orstatement audited fromtheThe annual financial report 28 days at least is before released theThailand, date of (Bonus) the meeting. announced to notice theThe Stock as of the Exchange annualof meeting, general

for h s I mprovement Thailand 85 Reports and Assessments and Reports for employees to account for the performance of the company beyond short-term financial financial short-term beyond company the of performance the for account to employees for and measures incentives long-term and short-term the with align to CEO the and directors executive for and performance measures. ole of Stakeholders • • continue improving their corporate governance practices. Important corporate documents for for documents corporate Important practices. governance corporate their improving continue English. in be available also should investors and shareholders achieve to responsibilities social with operations business carry their out companies listed Thai business sustainability.More companies are willing to disclosethe policies andpractices pertaining to stakeholders through the publication of a sustainabilityreport using international standards. Thai listed companies should disclose their actual practices according to the stated corporate corporate stated the to according practices actual their disclose should companies listed Thai review, implementation, report the on should board the example, For policies. governance the of action of course the disclose or strategy corporate determined the of monitoring and committees. board and directors individual the of evaluation performance Remuneration policy a remuneration disclosing by can improve companies listed Thai Thai listed companies should fully disclose their governance practices pertaining to the supplier supplier the to pertaining practices governance their disclose fully should companies listed Thai an protect to procedures and policy and rights, creditor’s of protection procedures, selection from behavior unethical retaliation. and/or illegal or individual who reveals employee R • Board Practices

Challenges Remain Still improvement. for areas following the have still companies Thai However, Thailand 86 ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Table 24: Thailand—Top 50Publicly Listed Companiesbasedon2015Total Score No. 0INTUCH 20 0PS 30 8MBK 28 9MINT 29 26 24 4RATCH 34 22 2PTTEP 32 5KTB 25 3KBANK 23 27 3PTTGC 33 0CK 10 8HEMRAJ 18 14 9HMPRO 19 16 1IRPC 21 2CPN 12 1PTT 31 5EASTW 15 3DELTA 13 7HANA 17 1CPF 11 8 4 9 6 2 5 3 7 1 LH LHBANK KKP IVL EGCO DTAC CIMBT BMCL BIGC BAFS BBL BCP ADVANC AAV AOT Ticker (Companies withscores of 90points andabove) Ratchaburi ElectricityGenerating Holding PTT GlobalChemical PTT Exploration andProduction PTT Pruksa Real Estate Minor International Land andHouses MBK LH Financial Group Krung ThaiBank Kasikornbank Kiatnakin Bank Indorama Ventures IRPC Intouch Holdings Home Product Center Hemaraj LandandDevelopment Hana Microelectronics Electricity Generating Eastern Water Resources Total Access Communication Delta Electronics (Thailand) Central Pattana Charoen Pokphand Foods CH. Karnchang CIMB ThaiBank Bangkok Metro Big CSupercenter Bangkok Aviation Fuel Services Bangkok Bank Bangchak Petroleum Advanced Info Service Asia Aviation Airports of Thailand Name continued onnext page

Thailand 87 Reports and Assessments and Reports Name Name Samart Corporation Samart Samart Telcoms Samart Bank Siam Commercial Siam Cement Supalai Thaicom Tisco Financial Group Financial Tisco Bank TMB Thai Oil True Corporation True Oil Thai Vegetable Bank of Ayudhya Bank of Expressway Bangkok COL Krungthai Card Krungthai Engineering and Construction Sino-Thai Companies with a score of 80–89 points of Companies with a score Ticker Ticker SCC TOP TMB TVO BAY BECL COL KTC STEC 1 3 5 2 4 41 TISCO 37 SCB 35 SAMART 36 SAMTEL 39 SPALI 38 43 45 42 44 TRUE 40 THCOM No. No. Table 24 continued 24 Table Notes: Companies are listed cluster by in alphabetical There order. are other 18 companies with scores between 80 points and 89 points that are not listedin the top 50 companies. Source: Thai Institute of Directors 2015. Viet Nam

Background of the Corporate Governance Framework Since its issuance in 2012, Circular 121/2012/TT-BTC, which provides regulations on corporate governance, has created a better legal framework for the Vietnamese stock market and enhanced enforcement on compliance with corporate governance regulations. A law on handling of administrative violations was issued in 2012, and a decree on administrative penalties for violations in the securities field and market was launched in 2013 aimed at strengthening the monitoring performance of government authorities and contributing to market transparency and greater disclosure. The latter provides sanctions in the securities market with a number of specific monitoring and enforcement measures against violations in corporate governance regulations, such as reporting, disclosure, and insiders’ and shareholders’ transactions.

A new circular on information disclosure on securities market, Circular 155/2015/TT-BTC, was issued in 2015 to improve stock market transparency and adapt to the new market developments and international integration. One of the notable changes in this circular is the inclusion of provisions that encourage listed companies to disclose information in both Vietnamese and English in order to increase foreign investors’ access to information. This new circular is expected to promote information disclosure in English and gradually raise the domestic disclosure practices to meet international standards in the near future.

Overall Analysis Overall Results

There were 55 companies that were reviewed for the year 2015. The number of reviewed companies increased by 10% as more companies were found to have key investor information available in English. This is a very encouraging signal, which means that more firms are now aware of their responsibilities in providing equitable treatment to both foreign and local investors.

Figure 54 shows the performance of each corporate governance principle of companies reviewed in four continuous years of assessment. There is an improvement in most areas of corporate governance observed in 2015 compared to previous years. The mean total score in 2015 is 36.75 points (compared to 35.14 points in 2014, 33.87 points in 2013, and 28.42 points in 2012). Though the improvement is encouraging, more effort should be exerted to raise the awareness of PLCs on the importance of corporate governance to companies’ sustainable development. This year, the most remarkable improvements are seen in parts C and E.

88 Viet Nam 89 . . . Total Score Total . . (.) (.) ) Score Level (.) ( PLCs) Reports and Assessments and Reports (. . . . Score Level . . .

. . . ( PLCs) Part E Part . points) (max. . . . Score Components Part D Part . points) (max. . . . ( PLCs) . . Part C Part points) (max. . . . . . Part B Part points) (max. . ( PLCs) . . Viet Nam—Corporate Governance Performance in Each Area, 2012–2015 in Each Area, Performance Governance Nam—Corporate Viet . Part A Part points) (max. . . - . Ho Chi Minh City University VNU-HCM of Technology, 2015.

. . . 54: Figure . . . (.) Score PLC = publiclyPLC listed company. Source: Among the 50 companies reviewed in 2015, there were 46 additional companies reviewed previously previously reviewed companies 46 additional were there 2015, in reviewed companies 50 the Among overall in Improvement last 4 years. the throughout reviewed companies 30 another and 2014 in companies 30 of sample the of made is comparison when found are results governance corporate better of a signal is found improvement the that means This first year. the from project the in included sufficient Meanwhile, governance. corporate efforts improving in firms of continuous and performance area. specific each needed in is attention tend scale. Firms score each in assessment of 4 years the in PLCs of distribution the shows 55 Figure 50 over scoring companies twice as many are there scales, and higher to scales lower from move to 2014). in companies three with compared 2015 in companies (six years previous the in than points risen has also score total lowest points. The 15.9 by has increased achieved score total highest The great the reveals improvement This 20. below scoring companies more no are points. There 1.87 by in transparency, and disclosure enhancing in top-ranked, the especially efforts companies, listed of year. this best practices international adopting in and practices, governance corporate implementing 40 points. It than lower scores have companies the of 63.33% above, figure based the on However, requires which bar the above reach than requirements fundamental the fulfill to easier normally is minimum perform at to firms encourage to only not built is ACGS effort more commitment. and much corporate of practices ethical and investors for concern real building at aim to also but compliance, Viet Nam 90 The minimum score in that level is –59 if the company did not get any bonus and incurred all penalties. in Level 2 that acompany satisfying all bonus criteria and not receiving any penalties canachieve is 26. penalties for serious violations of the The maximumscore same. in Level 1is 100. The maximum score practices and Level in all 2 aspects, includes bonuses for best corporate governance practices, or The scorecard consists of mainLevel two parts: 1includes criteria for good corporate governance 68.53 points,while the poorest-performing company scored only 21.35 points. scores. There is alarge difference in total scores among PLCs. The best-performing company scored Figure shows 56 the ranges of scores in each along with part, the minimum, maximum, and mean implement good corporate governance down to the management levels. toexpected set the tone at the top with regard to corporate governance and continuously commit to governance. To enable attainment of higher to need come scores, from the efforts top leaders who are Source: company. listed PLC =publicly Number of Firms ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Figure 55:Viet Nam—Distribution of Publicly Listed CompaniesinEachScore Scale Ho Chi Minh City University of Technology, VNU-HCM 2015. Technology, of VNU-HCM University City Minh Chi Ho ;)[ ;)[ ; )[ ;) [; ) [;) [;) [;) [; ) (PLCs) (PLCs) Score Ranges (PLCs) (PLCs) Viet Nam 91 . . . Total Score Total (.) (.) . ations from ations from Score Level Reports and Assessments and Reports . . . . bserv Score O Level . . . . Part E Part points) (max. alues – V Mean . . . irm Part D Part Score Components points) (max. F . . . . Part C Part points) (max. . . . . . Part B Part points) (max. . . . Part A Part points) (max. ssessment A Viet Nam—Maximum, Mean, and Minimum Scores in Each Part in Each Scores Minimum and Mean, Nam—Maximum, Viet 56: Figure –

Ho Chi Minh City University VNU-HCM of Technology, 2015. . . . . . . . Score (.) (.) ( ) = negative. Source: The benefits of good corporate governance can be derived from the analysis of the relationship relationship the of analysis the from can be derived governance corporate good benefitsThe of Market-to-Book by firms, reflected of values market and scores governance corporate between the M/B ratio A higher equity. of value book by divided price stock by measured is which ratio, (M/B) stocks. firms’ of assessment reflects a better market the of scores governance corporate and M/B ratios of relationship the of analysis the from results The that firms that means which related, positively are M/B ratios and scores that show assessment 4-year the account into took analysis This prices. stock higher have scores governance corporate higher have to believed are factors as these leverage, and profitability, growth, size, of terms in firms of differences the M/B of relationship positive The scores. governance corporate firms’ on impact a significant have for worthy is it why explain to evidence very convincing is score governance corporate the and ratio in increase an that shows line regression the of slope The governance. corporate in invest to firms Corporate Governance and Governance Corporate 4-Year Viet Nam 92 of the English version of corporate governance policies, board charter, code of conduct and/or code of improvement to meet the regional standards. Companies to need pay more attention to the disclosure 2015’s results show a significant improvement However, E. in Part there is still much room for attention so that corporate governance scores of Vietnamese companies canimprove. out of 15 points) B(with and Part an average score of 4.89 out of 10 points) also to need receive close average score of 3.9 out of 10 points) on the role of stakeholders. A (with Part an average score of 7.38 (with an average score of 11.75 out of 25points) on disclosure and transparency, C(with and Part an attention: E(with Part an average score of 9.63 out points) of 40 on board responsibilities, D Part B(15%),Part each). Aand C(10% and part From the results, there are three that parts require full Among the 100 total points in Level 1, the Ehas highest Part weight (40%), followed by D(25%), Part ormance under Level 1. Figure presents 58 the component scores of all corporate governance areas in Level 1. scores of the companies. However, it is notto well perform easy in this level. There are 180 criteria various corporate governance principles. Level 1questions also have asignificant impact on the overall el 1 Level 1questions are to important Vietnamese they firms as require fundamental compliance with L pay significantly higher prices for companies with good governance. of book value of the stock. The market highly values firms’ investment in governance and is willing to 10 points of the corporate governance score resulted in a$17.20 increase in stock price for every $100 Source: ratio. =market-to-book ratio M/B ev ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Ho Chi Minh City University of Technology, VNU-HCM 2015. Technology, of VNU-HCM University City Minh Chi Ho Figure 57: M/B Ratio P – – – (after controlling for differences insize, growth, profitability, andleverage) erf Viet Nam—Market-to-Book Ratio andCorporate Governance Scores Corporate Gov ernance Score Corporate governance score. M/B ratio.

Viet Nam 93 . Reports and Assessments and Reports . Achieved Score Achieved . Components of Level Components of Level . More Eorts . Part APart B Part C Part D Part E Part Viet Nam—Achieved Score in Each Part of Level 1 Level of in Each Part Score Nam—Achieved Viet 58: Figure

Maximum Scores in Each Part Each in Scores Maximum Ho Chi Minh City University VNU-HCM of Technology, 2015. Source: ethics, and list of board roles and responsibilities in their annual report. Complying with the Corporate Corporate the with report. Complying annual their in responsibilities and roles board of list and ethics, as critical is board the on directors independent of presence the to regard with Code 2012 Governance ASEAN the in markets. standard governance corporate regarded a highly is this capability as the to investors among confidence build to essential is independence board on Information interest. of conflicts prevent and executives, key monitor judgments, objective make to board the of fully disclose should companies important; therefore, also is independence supervisoryThe board’s support to committees functional build need to Companies qualifications. and status its independent effort more in to put has to directors of board The duties. assigned of variety the fulfilling in board the this and systems management risk internal the in areas key reviewing and overseeing of its roles fulfill fee and remuneration the of report. Disclosure annual the in shown be clearly to needs information board. the of important responsibilities the among is executives key and members board of structure are directors current and new for activities education and programs, orientation planning, Succession expect know. to investors that important information key among also years, previous with Compared transparency. and Part disclosure is D on nextThe important area listed Vietnamese of enhancement the shows scores lowest and highest the both in increase the general, mark. In passing the below still is score mean the However, disclosure. information companies’ to necessary all information fully disclosing and preparing in time more devote need to companies practices good for important evidence as provide as to well criteria, transparency and satisfy disclosure implementing. are and place in have companies that policies and Viet Nam 94 and practical steps to implement them. more awareness raising activities among listed companies on the importance of corporate governance in improving corporate governance performance in the country. Further improvement will require In general, the assessment for 2015 shows of Vietnamese the efforts authorities and listed companies independent director, and disclosing details of CEO remuneration. timely disclosure,e.g., establishing a separate board-level risk committee, having at one least female However, bonuses were awarded to companies implementing good corporate governance practices, company CEO in the 3 years, past and failing to disclose the independent status of board members. 2 since they were penalized for committing administrative violations, having achairperson the who was While many companies to score exerted effort in Level 1, some of them lost significant points in Level companies’ in mentioned corporate and policies. stated requirement of directors’ dealings in company shares within 3business days. These should clearly be in board discussions of matters when they have aconflict of interest, and apolicy on the reporting approving, and conducting RPTs, policies on requiring board members to abstain from participating of the dividend policy. Some policies and good practices are such needed, policies as on reviewing, profilesas of directors seeking election, names of auditors seeking appointment, and explanations into theeffort timely disclosure of AGM notices in English including comprehensive information such policies on equitable treatment of shareholders require much attention. Companies to need put more The 2015 results show that performance Bimproved in Part only slightly. Implementing and disclosing would help companies improve their scores remarkably. basic shareholders’ rights. Therefore, good disclosure of AGM minutes with sufficient information resolutions. Afocuses Part on AGM and related documents to look for evidence of the exercise of is paid in providing more rationales, explanations, and information to help investors in approving AGM applied well. Performance A on in rights Part of shareholders could enhanced be if enough attention rights. Achannel available for stakeholders to raise concerns and complaints also needs to set be up and practices in dealing with customer’s health and safety, supplier selection, anticorruption, and creditors’ contents of these to need improved, reports be especially in terms of revealing disclosure policies and encouraging signal that their awareness of corporate responsibility is heightened. Nevertheless, the sustainability or report separate corporate responsibility section in the annual This report. is avery According to more the than assessment of C, half Part of the companies have an independent policies. governance corporate policiesnecessary about reviewing and approving significant RPTs by board of directors in their wellbe implemented. To avoid potential conflict of interest, Vietnamese companies should embed Timely disclosurereport. of key information such financial as statements and annual should reports directorships of board members in other listed companies, should fully be presented in the annual attendance. Also, comprehensive biographical details of board including members, information about of major shareholders, board members and key executives, board remuneration, and meeting Vietnamese PLCs should pay more attention in effectively disclosing direct and indirect shareholdings ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Viet Nam 95 Reports and Assessments and Reports mprovement I s h for

Notice of AGM and supporting documents are not published at least before and at supporting published not documents 21 days are AGM of Notice the meeting. English. in especially and information, explanations rational lack notices AGM information and contain limited comprehensive, or not unavailable are minutes AGM executives. members board of attendance about and the key hours. 24 or failed evident be within not is to made results AGM of Disclosure or approval. after declaration days 30 within made not Dividend are usually payments Resolutions of the AGM are disclosed publicly and promptly. publicly disclosed are AGM the of Resolutions shareholders, of institutional especially encourage participation to Policies reports. annual in shareholders, disclosed are reas treng • • • • A • St • • Viet Nam—Strengths and Areas for Improvements in Rights of Shareholders in Rights of Improvements for and Areas Nam—Strengths Viet Ho Chi Minh City University VNU-HCM of Technology, 2015. Figure 59: Figure AGM = annualAGM general meeting. Source: The Rights of Shareholders category aims to assess how a company acknowledges and facilitates facilitates and acknowledges company a assess how to aims category Shareholders of Rights The framework governance corporate country’s The rights. shareholders’ fundamental all of exercise the vote and participate to right the including rights, their exercise to be able to shareholders requires approve elect and directors, nominate company, the for decisions fundamental make AGM, the in area this in PLCs of strengths the of One profits. company in a share receive and transactions, major disclosing companies of ratio the addition, In resolutions. AGM of disclosure public and prompt the is has shareholders, institutional especially shareholders, of participation encourage to practices assessment. last year’s to compared significantly increased incomplete and minutes AGM of disclosure of lack the to Part in A relate improvement for areas main The least at shareholders reach to fail notices AGM of majority A substantial notices. AGM in information agenda each for information and explanations insufficient provide and meeting the before days 21 AGM release to PLCs Vietnamese for uncommon also is It approval. shareholders’ requires that item effectiveness the and proceedings the on information valuable reveal expected to are which minutes, attendance the on as those such items, relevant of a number on scores poor to leads This AGM. the of session. question-and-answer the or executives key and members board of voting the and hours 24 within outcome AGM the disclose to failed PLCs of majority the Moreover, for votes abstaining and dissenting, approving, of breakdowns detailed of format the in not were results 30 within dividends paying of best practice the adopting companies of ratio the Also, resolution. each improve. to needs dividend the of approval or declaration after the days Part A: Rights of Shareholders of A: Rights Part Viet Nam 96 which limits the access to timely information by foreign shareholders. addition, AGM notices in English, if available, are usually released later than the local language version, in the notices of the AGM complete details of the profiles of directors seeking election or reelection. In standards primarily due to the unavailability of AGM notices in English. Only afew companies provide Nevertheless, the scores of Vietnamese PLCs in this category still remain low compared with regional seeking appointment and the dividend policy in their AGM notices is higher than 2014 result. improvement of AGM notices’ content. In particular, the ratio of companies including alist of auditors entities other than wholly owned subsidiaries. Another notable observation in this category is the slight equitably. In addition, only few PLCs have RPTs that could classified be financial as assistance to each ordinary share is equivalent to one vote. This ensures that all ordinary shareholders are treated The general practice in Viet Nam is that listed companies solely have one class of ordinary shares and insider trading and intransparent RPTs should prohibited be to protect the disinterested shareholders. for example, should facilitate the participation of all shareholders without undue complexity. Similarly, fair treatment of shareholders, especially minority and foreign shareholders. The AGM procedures, According to the principle of equitable treatment of shareholders, companies are required to ensure Part B:Equitable Treatment of Shareholders Source: transaction. party =related RPT meeting, general AGM =annual ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Figure 60:Viet Nam—Strengths andAreas for Improvement in Equitable Treatment Change to Ho Chi Minh City University of Technology, VNU-HCM 2015. Technology, of VNU-HCM University City Minh Chi Ho to Change • • • • • • A T • • S treng reas board discussions they of when matters have of interest. aconflict evidenceThere is of little policies requiring fromparticipating to directors abstain in the nature size and is rarely observed. that statement The RPTs are executed termsat and onfair arm’s regardless length of There is alack onthe review, of policy approval, of conduct RPTs. and 3 business days. dealing inDirectors company shares are not thesewithin dealings required to report appointment orreappointment is inadequate. Disclosure of names and auditors seeking election of profiles of seeking directors version. language AGM notices in English are not available date the onthe local same ornot as released subsidiaries. owned to entities of other financial assistance There isthan alimited of wholly number cases items into resolution. the same Resolutions of the AGM with deal only item one there and is nobundling of several

for h s I mprovement of Shareholders

Viet Nam 97 Reports and Assessments and Reports mprovement I s h for

Most PLCs reportMost efforts their PLCs their keep and to communities the with interact to friendly. environmentally chain value report responsibility corporate a separate or section, or sustainability have PLCs Many report or section. and welfare, as health, safety, employees’ to relating information disclose PLCs More as and development. well on training and supplier welfare customer to relating practices of disclosure of lack There is selection. pertaining of activities and protection and procedures anticorruption to Policies be should disclosed. interests creditors’ reports, or annual contact websites details provide company via should PLCs More of violation on any or complaints concerns their stakeholderswhich can voice use to rights.their policy or compensation staff for a reward place in to have should PLCs More performance. long-term their recognize and/or illegal concerning employees by complaints with dealing for Procedures whistle-blowers for as behaviors unethical as or procedures well policies protection be should provided. from retaliation reas treng • • A • • • • • St • Viet Nam—Strengths and Areas for Improvement in Role of Stakeholders of in Role Improvement for and Areas Nam—Strengths Viet 61: Figure Ho Chi Minh City University VNU-HCM of Technology, 2015. PLC = publiclyPLC listed company. Source: Part C: Role of Stakeholders of C: Role Part should framework governance corporate the that state Governance Corporate of Principles OECD The the protecting in activities companies’ of impacts environmental and social, economic, the consider and environment, creditors, customers, suppliers, employees, the including stakeholders, of rights the of role the that found is it ACGS, the using PLCs of assessment 4 year the During community. suggests that It PLCs. Vietnamese most from attention comprehensive received has not stakeholders In terms of RPT policy, few companies disclosed that they have a policy that requires independent independent requires that policy a have they that disclosed companies few RPT policy, of terms In avoid to order in voting from abstain to directors interested and RPTs material review to directors a in conducted were RPTs that stated PLCs Vietnamese of none virtually Moreover, interest. of conflict protection poor of issue the raises evidence such of lack The distance. a reasonable at and manner fair directors requiring a policy have to PLCs for rare also is It RPTs. significant from shareholders minority of days. 3 business within dealings report their to Viet Nam 98 of timely disclosure of audited financial statements and the use of alternative communication are hardly found in the annual Other improvements reports. that to need made be are the practice companies, training and education programs of directors, and remuneration details of board members executives. Information about dividend target ratio, directorships of board members in other listed disclosure of both direct and indirect shareholdings of major shareholders, board and members, key Nonetheless, there is still much room for improvement in this area. Companies to need improve the prior years’ financial statements, and downloadable annual reports. exhibit good practice in providing up–to–date information about business operations, current and and insider trading. In terms of the quality of the company website, a large majority of the companies are fully disclosed. The companies are also good at presenting all required information relating to RPTs identity of the beneficial owners of substantial shareholdings and details of corporate group structure corporate objectives, key and financial risks, and nonfinancial performance indicators. In addition, the most Vietnameseas PLCs adequately incorporate fundamental information in thesuch report, as In 2016, the quality of annual an information important reports, channel to investors, improved has raised the transparency of the securities market. information disclosure and Circular 121 providing corporate governance regulations have effectively the apparent increase in both maximumand minimum scores. It could imply that Circular 52 guiding Compared to assessment results of previous years, notable improvements in this area are seenwith transparency, the greater the evidence of good practices in corporate governance are revealed. to the release of relevant information. This is an area important the as greater the disclosure and The Disclosure and Transparency category aims to acompany’s assess level of transparency relating Part D:Disclosure andTransparency and/or unethical behavior, and for the protection from reprisal of those who reveal such behaviors. PLCs do not even have policies and procedures for dealing with complaints from employees about illegal remains to an area be that Vietnamese PLCs have not appropriately implemented. Furthermore, most any violations of their rights. In addition, an employee reward on long-term policy based performance encouraged to provide accessible channels for the related parties to voice their concerns or report the creditors’ interests have poorly been addressed by the sampled PLCs. Most of them should be selection practices. Policies and procedures pertaining to anticorruption activities and protection of However, many companies still fall in short disclosures regarding customer welfare and supplier activities to protect the environment and the community. trainingstaff and development programs. Most companies are more concerned about policies and relating to the employee such disclosures as on health, occupational safety, and welfare, well as as The 2015 results for this category shows improvement, indicating increasing compliance on disclosures development. the interest of broader stakeholders should given be importance by the company to reach sustainable ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Viet Nam 99 Reports and Assessments and Reports mprovement I s h for

The shareholders, major direct of and indirect members, shareholdings board and key disclosed. not are executives members board listed of other about in directorships insufficientThere is information directors, of programs and details and remuneration education companies, of training members. board of report. annual the in The found rarely dividend is target ratio days 120 than more usually statements is financial English audited in of Publication year-end. financial the from between channels and companies communication alternative use of limited There is e.g.,investors, analyst briefings, and conferences, media briefings. press Corporate the with statement on full compliance a clear does have not The company Code. Governance fees. and nonaudit audit of disclosure of lack There is not documents are constitutive company’s minutes, and the AGM notices, AGM website. company on the found are relations The contact department details the investor of of or person charge in not disclosed. Fundamental company information, e.g., information, risks, objectives, company corporate Fundamental key and financial report. performance annual statedand the nonfinancial in are indicators beneficial the owners and of substantial identities the of disclosure There is structure. group andshareholders details corporate of party related are to trading and insider transactions relating information Adequate report. annual the in presented and prior fundamental current provides information, English in website The company statements, financial years’ reports. annual and downloadable reas treng • • • • • • • • A • St • • • • Change to Ho Chi Minh City University VNU-HCM of Technology, 2015. Viet Nam—Strengths and Areas for Improvement in Disclosure and Transparency in Disclosure Improvement for and Areas Nam—Strengths Viet 62: Figure channels between companies and investors, e.g., analyst briefings, press conferences, and media media and conferences, e.g., briefings, press analyst investors, and between companies channels company’s the confirming a statement contain reports that annual few are there briefings. Moreover, cases of for least explanation an at or Code 2012 Governance Corporate the with compliance full rarely is policy whistle–blowing the of details and fees audit of disclosure the Similarly, noncompliance. company’s minutes, AGM notices, AGM incorporate fully need to websites company observed. The relations investor of charge in person or department the of details contact and documents, constitutive of channel communication and information key as effectively the more operate websites the that so shareholders. AGM = annualAGM general meeting. Source: Viet Nam 100 financial statements within days 60 the after fiscal year-end. compared to none in the previous year. Also, one Vietnamese listed company published its audited bonus points is that companies two released AGM notices 28 days before the date of the meeting, and establishment of a separate risk committee of the board. One notable improvement that deserves disclosure of details of CEOs’ remuneration, presence of afemale independent director on the board, that go beyond the criteria in Level 1. In 2015, PLCs have improved in several practices, such as The bonus section in Level 2is to motivate companies that implement corporate governance practices Bonus andPenalty systems also to need improved. further be a review and commenting on the adequacy of the company’s internal control and risk management such the as nominating and remuneration committees. Similarly, activities of the board in conducting are established to facilitate board activities in specific few expertise; companies set up subcommittees, board committees and disclosed the assessment process and criteria. Although the board committees also found that only some boards conducted annual evaluations of boards, individual directors, and In addition, few very companies apply diversity policy in selecting and nominating new directors. It was fiscal year or have at one least meeting of the nonexecutive board members. holds in other listed companies. Not many PLCs schedule board meetings before of the the start new board Most members. of them did not explicitly show the other directorships that each board member board from management and major shareholders, well disclose as as the identity of the independent Moreover,to 9 years. most of the reviewed companies did not clearly state the independence of the 50% independent directors in the board a orpolicy has limiting the term of independent directors remuneration of board members and the CEO. None of the reviewed companies more has than There is still room for improvement many as PLCs did not disclose details of the code of ethics and assuming the roles of chairperson and CEO. to the separation of monitoring and management, it is found that more PLCs have different persons websites, well in as providing as profiles or qualifications board of With members. supervisory regard PLCs remain strong in clearly stating their vision and mission in the annual and company reports implementation of the corporate strategy and in attending board meetings. Moreover, the Vietnamese In 2015, it is more apparent that board members exercise active roles in reviewing and monitoring the of shareholders the as board fulfills key certain functions effectively. performance. It is to expected add more value to business in the market and consider the bestinterest central role which is mainly to responsible be for guiding corporate strategy and monitoring managerial According to the OECD Principles of Corporate Governance, the board should ensure that its it perform Part E:Responsibilities of theBoard ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Viet Nam 101 Reports and Assessments and Reports mprovement I s h for

The board of directors monitor the implementation of the corporate strategy. corporate the of implementation the directors monitor The of board supervisory of or qualifications Profiles members board disclosed. are ethics. code of the of detailed of disclosure a lack There is directors and of board the of remuneration the of detailed of disclosure lack There is officer. executive chief least at up board.Independent 50% the make directors of do not independent for directors. 9 years no policyThere is of term limit on the member board listed companies in holds each that directorships other of Disclosure is limited. start meetings board the before schedule fiscal new the PLCs of year. Few year. the during themselves for a meeting members board organize do not Nonexecutive diversity a board policy. have PLCs Few new processes of selection and of nomination criteria disclosure inadequate There is directors. assessment, annual board on the and process evaluation, disclosure of a lack There is board, directors, the individual for and committees.criteria board and remuneration set subcommittees, companies up as nomination such the Few committees. management from the board independence the the of of disclosure of a lack There is and shareholders, independent major identity the members the board of and of by companies.most and adequacy comments the on the of reviews board the that no evidence There is management and risk systems. control internal company’s reas treng St • • A • • • • • • • • • • • • • Viet Nam—Strengths and Areas for Improvement in Responsibilities of the Board of in Responsibilities Improvement for and Areas Nam—Strengths Viet Change to Ho Chi Minh City University VNU-HCM of Technology, 2015. 63: Figure The regulatory and judicial enforcement capacity in Viet Nam has improved with new regulations regulations new with has improved Nam Viet in capacity enforcement judicial and regulatory The as such market, stock the for framework governance bettera corporate facilitate that issued being encourage that provisions is circular this in changes notable the of One 155/2015/TT-BRC. Circular Conclusions and Recommendations PLC = publiclyPLC listed company. Source: employment, labor, to pertaining laws of violations for deducted 2 were Level in points Penalty the case which one and in issues environmental or competition commercial, insolvency, consumer, last 3 years. the in CEO company been the had chairperson Viet Nam 102 commit to implementing good corporate governance practices down to the management level. corporate leaders who are to expected set the tone of good corporate governance and continuously Vietnamese PLCs to match region, their needs to in peers serious the come ASEAN from effort the top a culture of real concern for investors and promoting ethical practices of corporate governance. For not only aims at encouraging firms to at perform regulatory compliance levels, but also aims at building to meet market expectations requires much and commitment. more effort ACGS is an initiative that It is normally easier for PLCs to fulfill fundamental regulatory requirements. Reaching above the bar toneed work harder to promote astrong culture of good governance in PLCs. practices more seriously. The government, shareholders, institutional investors, and market activists State Securities Commission to raise awareness and listed companies taking corporate governance The 2015 assessment shows modest improvement and this is largely due to the role played by the quickly observed. and facilitated, more so that of PLCs voluntary efforts in improving corporate governance are more good governance. Therefore, shareholder engagement and market activism should encouraged be firms’ investment in governance and is willing to pay significantly higher prices for companies with in a$17.20 increase in stock price for every $100 of book value of the stock. The market highly values invest in corporate governance. increase An of 10 points of the corporate governance score will result of the 4years last of assessment is convincing very evidence to explain why it is worthy for firms to relationship of the ratio M/B and corporate governance scores found from the performance scores encouragingAn evidence that was the market is willing to reward good governance. The positive implementing. are to provide evidenceimportant of good practices and policies that companies may have in place and disclosing fully information all necessary to the satisfy disclosure and transparency criteria, well as as To improve disclosure and transparency, companies to need devote more time in preparing and the regional jurisdictions. However, much should more exerted at be effort both the regulatory and corporate levels to match seeninbeen disclosure and transparency and in responsibility of the E). board Cand Part (Part and other stakeholders’ rights at company level. In 2015, the most remarkable improvements have governance requires policies and procedures that promote awareness and observance of shareholders’ the importance of corporate governance to companies’ sustainable development. corporate Good Though the improvement is encouraging, should more made be effort to raise awareness of PLCs on in the 2015 assessment. near future. aresult, As more companies are found to have key investor information available in English English and gradually raise the domestic disclosure practices to meet international standards in the investors’ access to information. This new circular is to expected promote information disclosure in listed companies to disclose information in both Vietnamese and English in order to increase foreign ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 Viet Nam 103

Reports and Assessments and Reports Name Name Viet Nam Dairy Products Joint Stock Joint Products Dairy Nam Viet and Trade Stock Joint DHG Pharmaceutical Chemicals and Fertilizer Nam PetroViet Stock Anh Gia Lai Joint Hoang Pacific Pan PetroViet Nam Fertilizer and Chemicals Fertilizer Nam PetroViet City Securities Chi Minh Ho Industry Bank for Commercial Stock Joint Nam Viet Chi Minh City Securities Ho Sen Group Hoa Sai Gon Securities Trade Foreign Bank for Commercial Stock Joint of Viet Nam Stock Joint Products Dairy Nam Viet (alphabetical order by stock code) stock by order (alphabetical (alphabetical order by stock code) stock by order (alphabetical SSI VCB PAN CTG HSG DPM DPM HAG DHG VNM HCM HCM Stock Code Stock Code Stock Governance Scorecard based on 2015 Total Score based on 2015 Total Scorecard Governance Governance Scorecard based on 2015 Total Score based on 2015 Total Scorecard Governance Ho Chi Minh City University VNU-HCM of Technology, 2015. Ho Chi Minh City University VNU-HCM of Technology, 2015. 1 1 Viet Nam—Top 3 Publicly Listed Companies in the ASEAN Corporate Corporate the ASEAN Companies in Listed 3 Publicly Nam—Top Viet 7 3 3 5 2 2 6 9 8 4 10 VNM No. No. ASEAN = Association of Southeast Asian Nations. Source: ASEAN = Association of Southeast Asian Nations. Source: Table 25: Table Viet Nam—Top 10 Publicly Listed Companies in the ASEAN Corporate Corporate Companies in the ASEAN Listed 10 Publicly Nam—Top 26: Viet Table Viet Nam 104 Source: Nations. Asian Southeast of =Association ASEAN ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 No. 0PVD 20 0VNR 30 8VIC 28 24 9VNM 29 26 22 3SSI 25 23 27 0EVE 10 4HBC 14 18 6HSG 16 9PNJ 19 2GDGemadept GMD 12 1REE 21 5HCM 15 13 7MSN 17 1FTFPT FPT 11 4 8 6 9 2 5 3 7 1 Table 27: V Ho Chi Minh City University of Technology, VNU-HCM 2015. Technology, of VNU-HCM University City Minh Chi Ho Stock Code DHG CNG HAG DPM TCM BVH CTG PAN ACB TRA VCB SHB STB BID BIC EIB iet Nam—Top 30Publicly Listed CompaniesintheASEAN Corporate Governance Scorecard basedon2015Total Score DHG Pharmaceutical Joint Stock Viet Nam Joint Stock Commercial BankFor Industry andTrade CNG Viet Nam Joint Stock Bao Viet Holdings Joint Stock Commercial BankFor Investment AndDevelopment of Viet Nam BIDV Insurance Asia Commercial Bank PetroViet Nam Fertilizer andChemicals Hoang AnhGiaLaiJoint Stock Everpia Viet Nam Joint Stock Viet Nam Export Import Commercial Joint Stock Bank Ho ChiMinhCitySecurities Hoa Binh Construction&Real Estate Hoa SenGroup Masan Group Refrigeration Electrical Engineering PetroViet Nam Drilling &Well Service Phu Nhuan Jewelry Joint Stock Pan Pacific Sai Gon-Hanoi Commercial Joint Stock Bank Sai GonThuongTin Commercial Joint Stock Bank Sai GonSecurities Thanh CongTextile Garment Investment Trading Joint Stock Vingroup Joint Stock Joint Stock Commercial BankFor Foreign Trade of Viet Nam Traphaco Joint Stock Viet Nam Dairy Products Joint Stock Viet Nam National Reinsurance ( alphabetical order by stock code) Name

Viet Nam 105 continued on next page on next continued Reports and Assessments and Reports

Name alphabetical order by stock code) stock by order alphabetical ( Corporate Governance Scorecard in 2015 Scorecard Governance Corporate Hoa Phat Group Joint Stock Joint Group Phat Hoa Sen Group Hoa Ho Chi Minh City Securities Ho Stock Joint Services Investment Huy Hoang Hoa Binh Construction & Real Estate Construction & Real Binh Hoa Hoang Anh Gia Lai Joint Stock Anh Gia Lai Joint Hoang Viet Nam Joint Stock Commercial Bank for Industry and Trade Industry Bank for Commercial Stock Joint Nam Viet Stock Joint DHG Pharmaceutical Chemicals and Fertilizer Nam PetroViet Bank Stock Joint Commercial Import Export Nam Viet Stock Joint Nam Viet Everpia Stock Gas Joint Nam PetroViet Bao Viet Securities Joint Stock Securities Joint Bao Viet Stock Joint Investment Chi Minh Infrastructure Ho Stock Joint Nam CNG Viet Stock Construction Joint COTEC Baominh Insurance Stock Minh Plastics Joint Binh Holdings Bao Viet BIDV Insurance BIDV Nam Viet of and Development Investment for Bank Commercial Stock Joint Binh Chanh Construction Investment Shareholding Investment Chanh Construction Binh Asia Commercial Bank Asia Commercial CII BIC BCI BID IMP Imexpharm BVS BMI ACB CTG BVH BMP HPG HAG HCM Stock Code Stock 1 7 5 3 2 9 6 8 4 11 CTD 17 FPT FPT 13 DHG 15 EIB 21 HBC 12 16 EVE 19 GMD Gemadept 18 GAS 14 DPM 10 CNG 23 HHS 25 HSG 22 26 24 20 No. Viet Nam—List of All Publicly Listed Companies Being Reviewed in the ASEAN Being Reviewed Companies Listed Publicly All of Nam—List 28: Viet Table Viet Nam 106 Source: Nations. Asian Southeast of =Association ASEAN Table 28continued ASEAN Corporate Governance Scorecard Country Reports andAssessments 2015 No. 0PVD 40 0KDH 30 50 4SMC 44 48 46 9TDH 49 2SAM 42 8KBC 28 9KDC 29 34 5SSI 45 3SHB 43 38 6NTP 36 4VNM 54 PNJ 39 47 2MSN 32 27 52 5NSC 35 3NBB 33 37 53 1REE 41 1MBB 31 1TRA 51 Ho Chi Minh City University of Technology, VNU-HCM 2015. Technology, of VNU-HCM University City Minh Chi Ho Stock Code TCM NLG PAN VCB PAC TLG SVC STB VIC ITA Dry Cell andStorage Battery Joint Stock Tien PhongPlasticJSC National SeedJoint Stock Nam Long Investment NBB Investment Masan Group Military Commercial Joint Stock Bank Khang Dien House Trading andInvestment JSC Kinh Do Kinh BacCityDevelopment Holding Tan Tao Investment andIndustry SACOM Development andInvestment Refrigeration Electrical Engineering PetroViet Nam Drilling &Well Service Phu Nhuan Jewelry Joint Stock Pan Pacific SMC Trading Investment Joint Stock Sai Gon-Hanoi Commercial Joint Stock Bank Sai GonSecurities Thanh CongTextile Garment Investment Trading Joint Stock Saigon General Service Sai GonThuongTin Commercial Joint Stock Bank Thu Duc Housing Development Thien Long Group Vingroup Joint Stock Joint Stock Commercial Bankfor Foreign Trade of Viet Nam Traphaco Joint Stock Viet Nam Dairy Products Joint Stock Name ASEAN Corporate Governance Scorecard Country Reports and Assessments 2015 Joint Initiative of the ASEAN Capital Markets Forum and the Asian Development Bank

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