Hanoi, 21 July 2023

VNIDA – Commentaries and proposal on the Draft Law on Credit Institutions (amendment) regarding regulations on Independent Directors

After a long phase of implementation, the Law on Credit Institutions 2010, as amended and supplemented in 2017 (“Current Law on CIs”) has expressed certain regulations that no longer keep pace with the rapid development of socio-economic conditions and require adjustments. One notable aspect is the continuous growth in scale of the CIs (“CI”) in Vietnam, demanding a more transparent and effective corporate governance framework, aligned with the international best practices. The enhancement of corporate governance efficiency will ensure the stable operation of this extraordinary type of enterprise, and thereby sustaining financial system stability.

Independent Directors play a crucial role in intensifying transparency and efficiency in corporate governance activities. Hence, it is essential to revise and supplement regulations pertaining to Independent Directors for the purpose of improving the role and involvement of this position in CIs.

Based on our research of the Draft Law on Credit Institutions (amendment) as well as reviewing the practical implementation of the current legal framework of Independent Directors in the market, the Vietnam Independent Directors Association (“VNIDA”) had prepared a Commentaries and Proposal Report on the Draft Law on Credit Institutions (amendment) regarding regulations on Independent Directors (“Proposal”) and submitted it to the relevant State Authorities on 14 July 2023.

The Proposal was developed by the Legal and Policy Committee and specialist team of VNIDA based on references to and comparisons with the regulations on Independent Directors recommended by reputable international financial institutions such as the International Finance Corporation (IFC) and the legislation experience of some countries in the region such as Malaysia and Singapore. Accordingly, the Proposal provides general comments and assessments; in-depth analyses from a comparative perspective with international practices and other countries’ relevant legislation; and proposes specific amendment to the following issues:

(i) Standards and conditions on the independence of Independent Directors;
(ii) Nomination, dismissal, and disqualification of Independent Directors;
(iii) Number and proportion of Independent Directors in the Board structure;
(iv) Role of Independent Directors; and
(v) Appointment of the Board Chairman as an Independent Director or a lead Independent Director.

The Proposal also elicits the conflict of interest issue in the governance of CIs in connection to Independent Directors, and suggests that legislators carry out more comprehensive and in-depth studies on this problematic and complicated matter.

VNIDA hopes that the Proposal will serve as a valuable and informative resource for the relevant State Authorities to consider and to accomplish the Draft Law on Credit Institutions (amendment) regarding regulations on Independent Directors. This will help in intensifying the role and performance of the Independent Directors in CIs in Vietnam, enhancing the corporate governance quality of CIs in Vietnam, and maintaining the stability of the country’s banking-finance system.

You can refer full text of the Proposal here


Trở thành Hội viên VNIDA

VNIDA hân hoan chào đón Quý Ông/ Bà đáp ứng tiêu chuẩn/ điều kiện gia nhập Hội Thành viên Độc lập Hội đồng Quản trị Doanh nghiệp Việt Nam