Corporate Governance Scorecard of Hoang Anh Gia Lai Group

Topics: Board of directors, Corporate governance, Stock Pages: 49 (9244 words) Published: March 7, 2013

I. Introduction

From 1986 until now and more than 25 years from DOI MOI, the policy of multi-sector economy has implemented, Vietnamese enterprises have formed and developed very fast, very strong in Vietnam, widely available across the country and in all economic sectors. With the rapid growth in the number and scale of development, corporate governance (CG) becomes a factor attracting huge attention from the business and corporate law makers. Business environment is being improved leading to the corporate governance framework also builds complete. Vietnam’s CG has been recognized by the world is consistent with the requirements and principles but common CG activities in Vietnam is still a lot of poor and uneven quality of CG. According to an investigation by the Securities and Exchange Commission (SSC) in cooperation with International Financial Institutions (IFC) performance scorecard CG, the survey of 100 companies listed on the two exchanges HCM City Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) (80 enterprises on HOSE, 20 state-owned enterprises on the HNX) representing 80% of total market capitalization transactions. The results are evaluated based on data from 2011, shows that the average score of all companies was only 42.5%. Meanwhile, in the two previous surveys, the average CG of listed companies in Vietnam reached 43.9 per cent in 2009 and 44.7% in 2010. Enterprises with the lowest score was only 17.4% and the highest was 57.5%. This shows that Vietnamese enterprises are still very "new" to the concept of "corporate governance". Even many business leaders are confused between corporate governance and operational management.

Good CG is extremely important in creating harmonious relationships between board of directors (BODs), board of managements (BOMs), shareholders and other stakeholders with interests in the enterprise, so that will created along with the control-oriented development process of the business. CG is a strength which help businesses operate efficiently and enhance enterprises' access to external capital sources, aim at increasing the value of the company and contribute greatly to the development of sustainable firm for businesses and the economy. Vietnamese business enterprises is low quality, weak competitiveness. One of the basic reasons is that their CG has many weaknesses.

On the basis of field surveys, the paper deeply analyzes the state of CG in Hoang Anh Gia Lai (HAGL) on several aspects: The rights of shareholders (A), Equitable treatment of shareholders (B), Role of stakeholders (C), Disclosure and Transparency (D) and Responsibilities of the board (E).

II. HAGL’s CG Rating

1. History and Development of the company

HAGL has established in 1993 and has based in Pleiku city, Gia Lai province. HAGL is originally just a small factory, specializes in manufacturing furniture. So far, the company has grown to become multi-industry business group with total assets up to 25.577 billion VND and equity capital of 9.399 billion VND.

* 1993: Inauguration of wood processing plants and outdoor furniture in Gia Lai

* In 2002:

- Inauguration of granite processing plant, expanding an interior wood processing factory in Gia Lai.

- Football club Hoang Anh Gia Lai was found right after the approval of the People's Committee of Gia Lai

* 2004: Opened HAGL Resort Qui Nhon

* 2005: Opened HAGL Resort in Da Lat

* 2006:

- Opened HAGL Hotel Pleiku

- Completed and handed over apartment senior Le Van Luong (Vietnam)

* 2007: started of the project area apartment New Saigon. Started of the hydropower Daksrong 2 and Daksrong 2A (Gia Lai)

- Opened office buildings HAGL SAFOMEC (HCMC)

- Opened HAGL Plaza Danang

- Signed a contract to fight with Arsenal (England) - the famous football club world

- Inauguration of the academy football HAGL...
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