Corporate governance report

TERM PAPER
A Corporate Governance Assessment and Evaluation on Traphaco Joint Stock
Company
LE HUNG ANH
1100002
COMPARATIVE CORPARATE GOVERNACE
PROFESSOR CHARLES MADDOX
NOVEMBER 30, 2014
TAN TAO UNIVERSITY

2
Contents
A. Executive Summary......................................................................................4
B. Research Methodology .................................................................................5
I. Benchmarks..............................................................................................5
II. Structure and Assessment of Areas..........................................................5
III. Company Review ...................................................................................11
IV. Data.........................................................................................................12
V. Weight of areas and categories...............................................................12
VI. Evaluation method..................................................................................12
VII. Scoring and Weighting score ..............................................................13
VIII. Final company scores..........................................................................13
IX. Caveats ...................................................................................................14
C. Specific Finding..........................................................................................15
D. Discussion and Conclusion.........................................................................38
I. Overall Performance...............................................................................38
II. Discussion...............................................................................................39
1. The rights of shareholders...................................................................39
2. Equitable treatment of shareholders....................................................40
3. Role of stakeholders in corporate governance ....................................40
4. Disclosure and transparency ...............................................................41
5. The responsibilities of the board.........................................................42
III. Conclusion..............................................................................................42
E. Appendix.....................................................................................................44

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Abbreviations
AGM Annual General Meeting of Shareholders
BOD Board of Directors
BOM Board of Management
CG Corporate Governance
HOSE Ho Chi Minh City Stock Exchange
OECD Organization for Economic Cooperation and Development
RPT Related Party Transaction

4
A. Executive Summary
This term paper is commissioned to evaluate the assessment and implementation of corporate
governance which examined on Traphaco Joint Stock Company, a Vietnamese
Pharmaceutical company. The research is intended to measure the level of applicable
corporate governance practice regarding to the strengths and weakness on company’s
corporate governance performance.
Methodologies for approaching and analyzing company issues are based on the instructions
of OECD Corporate Governance Principles which is emphasized on five key categories
including the rights of shareholders, equitable treatment of shareholders, role of stakeholders,
disclosure and transparency, and the responsibility of the board. The assessments to the
company structure of corporate governance are based on available and accessible information
and document on public such as company Annual report, notice, minutes, reports and
company website.
The overall result shows that Traphaco Joint Stock Company performs well on its corporate
governance perspectives with the total average score is 69.1%. Contributed to that, there are
four categories have above average score except the role of stakeholder category – which has
score under average. In particular, the company basically exercises effectively the rights of
shareholder and equitable treatment of shareholders for providing fair and appropriate to
shareholder rights and interests. Disclosure and transparency is on medium level with some
ambiguous issues. The remaining two categories, role of stakeholders and the responsibility
of the board, needed to be improved to meet the requirement on the Principles.
The research have found that Traphaco is on the right trace to improve and fulfill their
assessments on corporate governance benchmarks based on the OECD Principle guidelines.
For the effective achievements, the company should promote the role of Board of Director
and gain supports from regulators as well as its stakeholders, for a major driving force in
implementing good corporate governance practice.
The accessed data of this research mainly based on available information and documents
public on the company website and other reliable online sources. This may cause limitations
and possibilities of inaccurate on evaluated results.

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B. Research Methodology
I. Benchmarks
OECD has been accomplished as a leading organization to promote good practice of
corporate government. The OECD Principles of Corporate Governance is accepted as an
international benchmark and wildly applied in both country level and company level. The
ultimate goal of the Principles is identify the strengths and weakness in corporate governance,
and propose orientations for improving and enhancing the performance of corporate
governance companies.
The effective framework of corporate governance under OECD methodology should be
included six principles1
 Principle I: Ensuring the Basis for an Effective Corporate Governance Framework
 Principle II: The Rights of Shareholders
 Principle III: The Equitable Treatment of Shareholders
 Principle IV: The Role of Stakeholders in Corporate Governance
 Principle V: Disclosure and Transparency
 Principle VI: The Responsibilities of the Board
Each principle would have more detail criteria for accessing and analyzing closer to company
aspects of corporate governance which is consistent with company regulatory and complying
with the Vietnamese law. Except the Principle I, which is considered for dealing with
“government and regulator issues”2
, the remaining five principles are critical for the
evaluation of company in term of effectiveness and transparency.
II. Structure and Assessment of Areas
The research takes a review on five important areas of the OECD principles consisting of
rights of shareholders, equitable of treatment of shareholders, role of stakeholders, disclosure
and transparency, and responsibilities of the board. The approaches of each area will be
measured and evaluated by asking questions on specific issues, instructed by OECD criteria,
for assessing the company corporate governance based on the available public information of
the company. There have five parts and each part dealing with one principle containing
assessment questions:
Part 1: The Rights of Shareholders
1
Methodology for Assessing the Implementation of OECD Principles of Corporate Governance – OECD 2007.
2
Vietnam Corporate Governance Scorecard 2012, p.27.

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This part takes a various measurements related to the exercise of shareholder rights in the
view of how good these rights are in practice. The basic and fundamental rights of all
shareholder must be ensured in equality, obviousness and straightforward. These basic rights
should be included the right to secure method of “ownership registration, convey of transfer
shares, obtain relevant and material information on the corporation on a timely and regular
basis, participate and vote on general shareholder meetings, elect and remove members of the
board; and share in the profits of the corporation.”3
. Those basic interests are the main
motivations for shareholder making their investment, involving in the operation of the
company and controlling the working of their capital.
The questions for evaluation on rights of shareholders include following aspects:
Question Reasons for measuring
Basic Shareholder
Rights
Protecting an extent shareholder interests, fairness and equality;
enhancing their managing roles and assuring their confidential
investments.
Right of
participating in the
AGM
Exercising the level of shareholders decision making, monitoring and
controlling company operation and performance through the mutual
trust with directors.
Shareholders should have sufficient information about remuneration
policy because it have been affecting the long-term operation and
aligning the performance of director with company interests.
Right of
participating in
director nominated
and deciding
remuneration policy.
Right in interaction
with the external
auditor
External play an important role in giving an independent and fair
picture of company consolidated financial information. Thus,
shareholder should have right to communicate, and appoint with
external auditor for ensuring a transparency financial issued related to
their interests.
Rights in AGM
effectiveness and
processes
AGM is “the highest governing body of the company”4
which
shareholders could have closest look and evaluation the performance
of the company. Thus, BOD and SB must be accountable to
shareholder interests by providing accurate and transparent reports
and other important documents for shareholder precise voting.
3
4
Vietnam Corporate Governance Scorecard 2012.

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Part 2: The Equitable Treatment of Shareholders
A good corporate government practices “should ensure the equitable treatment of all
shareholders, including minority and foreign shareholders”5
. The fundamental rights of all
shareholders should be respected and defined the guidelines to preserve effectively equitable
treatment of shareholder, as well as protected from infringed actions. This part includes
questions that investigate not only in how equitable treatment of shareholder is exercised, but
level of integrity of protection for shareholders from potential misappropriated actions of
boards, managers as well as majority shareholders. The categories of questions will cover
issues in equally treatment of share classes in following aspects:
Questions Reasons for measuring
Equitable treatment of
shareholders in share
rights and voting rights
With the same class of share, it should carry the same right.
Shareholders that hold those share must be treat equally for
obtaining information as well as decision making. This enhance
the fairness confidential of shareholder involving in company
decision making.
Application of
shareholder rights in
certain circumstances
Accompany with the policy on equitable treatment, the level of
practical application the rights in reality should be regularly
promoted, especially minority shareholders.
Company structure and
shareholder right of
redress from abusive
actions
Shareholders need to know about the company structure and the
level of alerting from abusive actions should be observed for
preventing and also, for appropriate compensations.
shareholders at the AGM
It is important for shareholders exercising their right at the AGM
and all of them should be treated equitably in assessing AGM
procedures and approval of all issues related to the company
changes which are discussed.
An alert to conflicts of
interests, insider trading,
and self-dealing actions
There are always potential conflicts between BOD and
shareholders related to the interests of both sides. The policy on
this relationship should be disclosed and follow the Law. For the
good CG practices, those conflict issues should be well aware,
monitored and managed.
Related party
transactions
Related party transactions have generated profit or dividend to
shareholders. Thus, the information on this issues should be well
managed and fully provided to all shareholders.
5

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Part 3: The Role of Stakeholders
The sustainable development of a company have been recognized as “the competitiveness
and ultimate success of a corporation is the result of team work that embodies contributions
from a range of different resource providers including investors, employees, creditors, and
suppliers. Therefore, in the long-term interest of a corporation foster wealthy-creating co-
operation among stakeholders.”6
The main characteristics of this part will take a disclosed
view and legal framework of the stakeholder related issues. The questions will briefly
describe the respectabilities of stakeholder right dealing with law or mutual agreement, an
effective compensation available dealing with violations, sufficient and reliable access to
information, directed communication and company’s obligation to broader community.
Question of evaluations:
The protection
and recognition
on stakeholder
interests.
The company must effectively enforce the legal right of stakeholders
stated in law and mutual agreement. Because stakeholders have strong
impacts on the company activities. By this, it will favorable the mutual
relationship between the company and their stakeholders. Moreover,
stakeholder mutual communication should be promoted for unifying
benefits in case of infringement happens.
Company
obligations and
employee
benefits
“The employees of a company are important stakeholder”7
who is the
critical motivation for the development and prosperousness. Thus,
benefits and protection from unethical issues for employees must be
aligned with long-term company policies, should be carefully evaluated.
Creditor rights
Creditors deserve an important investor and their right should be
respected with the obligation of the company in paying their interests.
Benefits to the
environment and
the community
The good corporate governance practice is not only focusing on the
company development, but the being responsible for the social
sustainable development.
Part 4: Disclosure and Transparency
The international standard of OECD about disclosure and transparency require “the timely
and accurate disclosure on all material matters, including financial situation, performance,
6
OECD Principle of Corporate Governance, Annotation, Chapter IV, p.46, 2004.
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ownership and governance of the company.”8
The strong disclosure and transparency policies
contributes to promote shareholder ability to monitor and exercise their ownership rights,
increase the company level of investor protection and attract new flow of capital as well as
maintaining confidence of market. The weak of transparency cause a totally counter-effect
such as a failure and bankruptcy in the perspective of complex and non-disclosure financial
statement and audit. It rises an important unethical issues for financial management and the
warning of catastrophic of mismanagement.
Based on those importance of the issues, the good corporate governance practices of a
company should be fairly investigated and disclosed for critical categories include in the
Annual report such as “financial and operating result, company objective, major share
ownership and voting rights, remuneration policy, issues regarding employees and other
stakeholders, related transaction party, governance structure and policies.”9
In addition,
disclosure and transparency related to independent audit, accountable external auditors,
timely and cost effective information should be well prepared and disclosed. This part
consists of questions that take measurements on above categories based on available
document publicly provided by the company.
Annual report
The Annual report is considered as a communication vehicle for
shareholders accessing to the performance of the company, specific in
financial statement, BOD and SB performance reports, dividend
policies and other necessary information. Those information gives the
shareholder access to “management’s capacity to respond successfully
to changes in the business environment and convince potential
investors of the benefits of investing in the company”10
.The company
should provide a transparent and accurate Annual report for achieving
a good CG practice.
Disclosure on
related party-
transactions
The undisclosed on related party-transactions would cause a risk of
abusive actions which are harmful to the company performance and to
shareholders interests.
CG report
perspectives
The CG report should be provided as part of the Annual report.
Because it includes BOD and SB values and responsibilities, as well
as the company guideline and strategies. Based on the SG report,
shareholder could have accessed to the company performance,
8
The OECD Principles of Corporate Governance, 2004.
9
OECD Principles of Corporate Governance, Annotation, 2004.
10
Vietnam Corporate Governance Scorecard 2012, p.67.

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objective achievements and consolidated financial statements.
External audit and
audit activities
disclosures
An external auditor is critical for independence, assurance and
credibility in providing a competent financial information to
shareholders and affecting the opinion of potential investors also.
Thus, there should be transparent in authorizing external auditor with
an approval from shareholders.
Information
disseminating
Level of mechanism for ensuring shareholder access to information of
the company. This is important for them to inspect and monitor the
ongoing operation of the company.
Part 5: The Responsibilities of the Board
The Board generally takes a responsibility for the whole operating of the company and be
accountable to the interests of company and its shareholders. The OECD principle for this
part recognized the responsibilities of the Board in “monitoring managerial performance and
achieving an adequate rate of return for shareholders, while preventing conflicts of interest
and balancing competing demands on the corporation.”11
The works of Board must be
effectively comply with law and regulations, as well as the Charter and other company’s
agreements.
Basically, Vietnamese companies have two tiers of Board consisting of BOD and SB. The
BOD takes a duty of ensuring fairness and equitability on shareholders, working on company
interests, protecting shareholder rights. Moreover, BOD is responsible for the operation and
performance of its business, for appointment, remuneration and discipline policies. Which is
all should be adherent to Company Charter and reported to the shareholder at the AGM.
On the other hand, SB is responsible for monitoring all financial oversights of the company
which are standardized by law and regulations. The SB also monitors the internal fulfillments
related to role of BOD and other management’s functions for reporting to shareholders.
In general, BOD and SB are not only act on company and shareholder interests, but on their
own interests. Thus, they are expected to take more responsibility on transparency of their
works. The questions for evaluation responsibility of board includes following aspects:
Board basic responsibilities
Evaluating the effective role of board and discovering
comprehensiveness level of CG guidelines.
Leadership role of the chairman Measuring the level of effectiveness that the chairman
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leads the other directors with integrity and trust. Because
the Chairman provides the effective leadership to all
board members and quality decision making as well as
ensuring the working of the whole operation. The
chairman is expected to be independent.
Skills, competences and
effectiveness of Board
Board is responsible for the best interest of the company
and its shareholders. Thus, competency and skill of Boar
should be well accomplished and disclosed to
shareholders.
Board effectiveness referring
information, meetings and
records
Level of transparent requirements in board meeting and
records should be well disclosed to their shareholders.
Because this disclosure will reveal the effectiveness of
the working of Board are responsibilities.
Board effectiveness referring to
company strategy, risk, and
oversight
Level of effectiveness of board in handling company
objectives and operations. Shareholder’s intension for
making an investment is how their investing will
generate interests. Thus, Board effectiveness referring to
company strategy, risk, and oversight is important for
shareholder decision and should be measured.
Auditing
The responsibility of auditing activities in providing
clear, effective, and reasonable reports on company
operating and functioning.
Supervisory Board role
SB assures that work of BOD must be comply with law
and regulation. SB also is responsible for inspecting and
evaluating of the financial reports, as well as managing
the external auditor.
III. Company Review
The research takes a view on the performance of Traphaco, a Vietnamese manufacturer and
distributor of pharmaceutical products, on its degree of corporate governance practice in
current circumstances. Traphaco Joint Stock Company was successfully conducted IPO in
2007 for attracting participating of shareholders. The company was listed on Ho Chi Minh
Stock Exchange (HOSE) in 2008, after being invested by Mekong Capital (a private equity
company based in Ho Chi Minh City).

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Mekong capital works closely to the board of management for improving the company
corporate governance structure. Up to this point, the charter capital of Traphaco has been
increased to VND 246,764,330,000 after 10 issuances.
IV. Data
The assessment of this research consists of all available public information and documents
provided on the company website and other internet reliable sources. They are included:
Traphaco Annual Report, Company Charter, Minutes of Meeting, AGM Notices, AGM
documents, company website, and other reliable corporate governance sources.
V. Weight of areas and categories
Weighting practices are based on specific 78 questions divided into five part according to
OECD principle which have mentioned in structure part. In each part, every questions would
be evaluated by a comparison between the company’s reality CG issues and the standardized
of CG good practice in the Vietnamese Model charter and OECD Principle Corporate
Governance.
The weighting of scored areas regarding to five categories are summing to 100% as
following:
Category
Number
of
questions
Weight (%
of total
score)
Why it is needed
The rights of shareholders 17 20 The chosen of equality weight of score
to each five categories of corporate
governance factors would increase the
relative importance for each category
that needed to be emphasized.
shareholders
16 15
Role of stakeholders in
corporate governance
7 5
Disclosure and transparency 19 25
The responsibilities of the
board
19 35
Total 78 100
VI. Evaluation method
The quality of corporate governance should be recognized in three levels according to the
terminology of the OECD Principles Assessment Methodology. Because there is a limitation

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in consistent and reliable CG evaluation method, the research refers the rating based on the
actual disclosure on available documents and information. The scale would be as follow:
 Good corporate governance observed, regarded to transparency on public and
available information that could be found and evaluated, the answer “YES” will be
rewarded 1 point;
 If it is not observed or less fulfillments regarded to OECD corporate governance
standards, the answer “NO” will be rewarded 0 point.
In case of information are not observed publicly, it would be considered as non-observed and
reward for point zero. Based on the Vietnam corporate governance scorecard 2012, the
recognition for good corporate governance based on global practices will “score in the 65%
to 75% range, or higher.”12
VII.Scoring and Weighting score
Total item scored for the company is determined by summation of individual scored question,
the weight would be calculated as follow formula:
The total weighting score is obtained by totaling score across five areas.
VIII. Final company scores
The final score performed on corporate governance of the company resulted in this box:
Performance Outcome
75% and above Excellent
65%-74% Good
50%-64 Fair
Below 50% Need improvement
Scaled by Vietnam Corporate Governance Scorecard 2012.
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IX. Caveats
Firstly, the research is conducted on available public information and documents and it is
not expected to discover and predict the accurate level of corporate governance in reality.
Secondly, there are only corporate governance policies and practices which are standardized
by OECD principle are assessed in this research.

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C. Specific Finding
This section includes the analysis on specific questions in order to examine which categories
are well implemented and which ones need to be improved.
Part 1: Rights of Shareholders (OECD Principle II)
No. Questions Answer Sources References
Basic Shareholder Rights
1 Does the company
offer an accurate
ownership on share
registration?
YES Company
Charter:
Article 6
Company charter, Article 6: Share
Certificate.
“Shareholders of the Company are
entitled to be granted a share
certificate or certificate on ownership
of shares (hereinafter referred to as
“share certificate”) corresponding to
their number of shares and types of
shares.”
2 Does the company
offer freely
transferring share
right?
YES Company
Charter,
Article
8/Article 11
The company offer the right for
shareholder freely transfer their share
comply with the Law.
Company charter, Article 8:
“All shares can be freely transferred,
unless otherwise provided by this
Charter and the Law. All shares
listed at the Stock Exchange/the
Securities Trading Center shall be
transferred under the Law on
securities and the securities
market, and the of the Stock
Exchange/the Securities Trading
Center.”
Company charter, Article 11, item
2c:
“To freely transfer the paid-up
shares in accordance with the
provisions of this Charter and the
applicable Law.”

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2 Does the company
effectively and
seriously provide
voting right, and
right to timely
information?
YES Company
Charter,
Article 11,
items 2a,
2e.
Voting right and right to information
are provided on company charter.
Article 11, item 2a: “Holders of
ordinary shares have the right to
attend the General Meeting of
Shareholders and exercise the right
of voting in person or through a
Proxy.”
Article 11, item 2e: “inspect
information related to Shareholders
in the list of Shareholders who are
fully qualified to participate in the
General Meeting of Shareholders and
request the correction of inaccurate
information.”
3 Do shareholders
have the right in
nominating or
dismissing member
of BOD and SB?
YES Company
Charter,
Article 11
and
Article 24
The right of nominating member of
board is mentioned in company
charter. Article 11, item 3a:
“A Shareholder or a group of
Shareholders holding more than
5% of total ordinary shares for six
consecutive months or more shall
have the right to nominate members
of the Board of Management or the
Inspection Committee.”
Company charter, article 24, item
2:
“The Shareholders holding more
than 5% of voting shares for a
consecutive period of six months or
more have the right to add up the
voting rights of each one together for
nominating candidates to the Board
of Management. A Shareholder or a
group of the Shareholder holding
more than 5% to below 10% of

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voting shares for a consecutive
period of six months or more shall
have the right to nominate one
member; from 10% to below 30%
shall have the right to nominate
two members; from 30% to below
50% shall have the right to nominate
three members; from 50% to below
65% shall have the right to nominate
four members and from 65% or more
shall have the right to nominate full
of members.”
4 Does the company
pay interim and
dividend an
equitable and timely
schedule?
YES Company
Charter,
Article
11/Resoluti
on of BOD
on interim
and
dividend.
The dividend policy stated in the
Company Charter. Article 11, item
2b:
“Holders of ordinary shares have
right to receive dividends.”
The company have timely interim
and dividend announced on the
website on regular “Resolution of
BOD on interim and dividend.”
5 Do shareholders
have the right to
“approve major
corporate
transactions
(mergers,
acquisitions,
divestments and / or
takeovers)?”13
YES Company
Charter,
Article 20,
item 2.
The article 20, item 2 in the Charter
states that “the purchase
transactions affected by the
Company or its branches valued at
50% or more of the total value of
assets of the Company and its
branches recorded in the latest
audited accounting books shall be
approved by at least 75% of the
total voting shares of the
Shareholders eligible to vote who
attend the General Meeting of
Shareholders in person or through
the Proxy.”
13
Vietnam Corporate Governance Scorecard 2012

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Right of participating in the AGM
6 Does the company
provide an effective
AGM shareholder
notice (notice
sufficiently includes
date, location,
discussed issues?
YES Company
Charter,
Article 17
Company
website
The AGM notice must be provided
on timely manner which is stated in
the company Charter, Article 17,
item 2 that requires date, location, an
agenda for the meeting.
The item 3 of this article requires
that: “The notice of the General
Meeting of Shareholders must
include the meeting’s agenda and
information relating to matters to
be discussed and voted on at the
General Meeting of
Shareholders……”
In addition, the company website
also provide timely the “Invitation
letter of the annual general assembly
of shareholders.” Thus, there is full
information about the AGM that
could easily be found.
7 Are there
opportunities for
shareholders ask
questions at the
AGM allowed on the
agenda?
YES Guidelines
and
Working
Agenda on
the AGM.
The company have clearly stated an
instruction procedure for
shareholders to discuss at the AGM
effectively in the “Guidelines and
Working Agenda on the AGM.”
8 Do shareholders
have opportunities to
place a matter or
proposal at the
AGM?
YES Company
Charter,
Article 17
The shareholders have right to rise
issues, matter or proposal at the
AGM which is stated in Article 17,
item 4 - Convention of the General
Meeting of Shareholders, agenda
and notice of the meeting.
It states that: “A Shareholder or
groups of Shareholders as stipulated
by Article 11.3 of this Charter have
the right to propose matters for

19
the agenda of the General
Meeting of Shareholders.”
9 Are there evidence
of the attendance of
Chairman, BOD,
Head of SB, and
CEO?
YES Company
Charter,
Article 19,
item 4.
Minute of
the Annual
General
Meeting
2014.
The attendance of Chairman, BOD,
Head of SB, CEO is not compulsory
as stated in company charter, Article
19, item 4.
However, it is evident that there are a
full attendance of those position
which is mentioned in the “Minute of
the Annual General Meeting 2014.”
Right of participating in director nominated
10 Are there sufficient
information (from
notice and company
website) about
potential nominated
directors for
shareholders to
evaluate?
YES Annual
Report
Decision on
nominating
additional
director.
There is sufficient information
related to profile and qualifications
of the potential nominated directors
provided in the BOD report, part of
the Annual Report (page 32). There
is a “Decision on nominating
additional director” public on the
website for announce voting results.
11 Do shareholders
effectively have
opportunities to
receive information,
make their view, and
vote on
remuneration policy?
NO Annual
Report
Company
Charter
The amount of Board remuneration
are disclosed on the Annual report
2013 (Consolidated financial
statement, page 104). However,
there are no additional information
find on public about the detail
information on remuneration for
appropriateness to shareholders.
Right interaction with the external auditor
12 Were there
evidences of the
attendance of
external auditor at
AGM for evaluating
company audit
NO Annual
Report
There is no evident information
related to the attendance of external
auditor at the AGM available on the
website or in other company public
documents. There is only an
independent report of external

20
issues? auditor mentioned in the Annual
Report 2013 (page 73), reported by
Deloitte Vietnam limited. Thus, this
leads to poor interaction between
shareholders and external auditor.
13 Did the company
fully provided
independent
information about
appointment of
external audit to
shareholder?
NO The information on external auditor
is rarely provided on official
document on the website with full
profile.
14 Did the shareholder
have opportunities in
selecting and
appointing external
auditor for the
company?
NO Minutes on
AGM 2014
Generally, the selecting of the
external auditor is authorized for
BOD and shareholder will voting for
appointing the external auditor. The
voting result are disclose on the
Minutes on AGM.
Rights in AGM effectiveness and processes
15 Does BOD and SB
provide a full and
comprehensive
report to AGM on
their performance?
YES Annual
Report
The report on the performance of
BOD and SB are found in the
Annual Report 2013 (page 26 – 44).
The report are generally detail, clear
and comprehensive related to
business performance, financial
situations, company objective and
recommendations.
16 “Does the company
provide explicit
information in the
AGM notice for
voting in absentia
and proxy voting?”14
YES Company
website
Notice on
AGM 2014.
Company
Charter,
Based on the Company Charter,
stated in Article 15, item 1, the
shareholder could “Authorized
Representative(s) to exercise their
rights of shareholders in
accordance with the Law.”
The Notice on AGM that is public on
14

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Article 15. the website contain information and
procedure for absentia and proxy
voting.
17 Does the company
provide a full and
necessary
explanation (in
AGM meeting
minutes or website)
about each agenda
items approved by
shareholders?
YES Company
website
Minutes on
AGM .
Company
Charter,
Article 22.
Based on the Company Charter,
Article 15 stated that it is
requirement for the company to
provide sufficient and timely minute
with “true evidence of works which
have been conducted at the General
Meeting of Shareholders.”
The minutes on AGM posted on the
website includes agenda items that
fix with issues discussed in notice
and Annual report 2013.
Part 2: The Equitable Treatment of Shareholders (OECD Principle III)
No. Questions Answer Source References
Equitable treatment of shareholders in share rights and voting rights
that the same class of
share carrying the
same right?
YES Traphco
Regulation
on
Corporate
Governance
The company provides shareholder
the same right on the same class of
share that they hold and it is stated
on Chapter 2, Article 3, item 5 in
the “Traphco Regulation on
Corporate Governance 2014.”
2 Does the company
feature one vote for
one share policy?
YES Guidelines
and
Working
Agenda on
the AGM
The policy of “one vote on one
share” is stated in the “Guidelines
and Working Agenda on the AGM.”
The section II, item 3 provides
shareholders one vote for each share
owned.
Application of shareholder rights in certain circumstances
that minority
shareholders are
effectively
NO The public documents for assuring
the minority shareholder right is
limited.

22
protected?
4 Do minority
shareholders have
impacts on board
decisions or other
company key issues?
NO Company
Charter
Annual
Report
The Company charter, Article 11
“Right of Shareholders”, item 3
stated that “A Shareholder or a group
of Shareholders holding more than
5% of total ordinary shares for six
consecutive months or more” have
right on key issues of the company.
There is no room for minority
shareholder right in making decision.
The Annual Reports are also not well
stated the on equitability for small
holding share investors.
5 Does the requirement
on re-nominated and
re-elected director
timely exercise?
YES Company
Charter
The re-nominated and re-elected of
BOD are required in the time interval
of five years and unlimited time of
re-nomination as stated in the
Company Charter, Article 24, item
1 “ the members of the Board of
Management may be re-elected for
an unlimited number of terms.”
6 Does the company
effectively enable
cross border voting
rights?
NO Foreign or cross investors voting
rights are not possibly observed and
not well facilitated. Firstly, the
documents are rarely found in
English versions as well as not being
public on the website. For instance,
the latest uploaded English material
on Annual Meeting is still up to the
year 2009. Secondly, the related
material English on company issues
are not available in timely manner
compare to the best practice within
20 days. The English materials are
only translated only for special
purposes and hard to find on public.
Company structure and shareholder right of redress from abusive actions

23
7 Does the company
availably provide a
clear and transparent
description of
company structure?
YES Annual
Report
The company provide a clear and
transparent description of company
structure, with detail explanation in
inter-relationship, director’s profiles,
organization chart and function of
each responsible department. All
those information are revealed in the
Annual Report (page 54-61).
8 Are there no
evidence of structure
that potentially may
violate minority
shareholder rights?
NO Company
website
Annual
Report
Although the structure of the
organization is described in the
Annual Report, it may not fully
comprehensive to all shareholder,
especially minority shareholders. It
will imply a possibility of infringe
their right. The structure is also not
posted on company website which
limited the access to all shareholders.
9 Does the company
provide and ensure
effective redress
policy for
shareholders in case
of complaining or
violating their rights?
YES Company
Charter
Company Charter, Article 34, item 2
“Compensation.”
It is stated that “The Company shall
pay compensation to persons who
were, are being and shall possibly be
in danger of becoming an involved
party in cases of complaint, lawsuit
or prosecution, which were, are
being or shall possibly be
conducted regardless of whether
these are civil or administrative
cases…” The company assure the
available redress if there are any
infringements for shareholders as
stated in this Article.
Equitable treatment of shareholders at the AGM
10 Are there evidences
provided that
shareholders
effectively
YES Minute of
AGM
Guidelines
and
There is evident that the company
inform shareholders about
fundamental changes by posted
“Announcement” on the company

24
participate in
approving company
fundamental
changing issues?
Working
Agenda on
the AGM
Company
website
website. The announcement includes
the reasons and possible resolving
directions.
Such fundamental changes will
discussed at the AGM and
shareholder would vote for
approving, stated in the “Guidelines
and Working Agenda on the AGM.”
The results will be recorded in the
“Minute of AGM”
11 Is the AGM notices
sent out in timely
manner (which is
between 20 and 30
days in good CG
practice)?
YES Company
website
The AGM notice is generally posted
about a month before the AGM
happens, observed on the company
website.
12 Are the notice and
other important
document translated
in to English
versions?
NO Company
website
The majority of documents are not
translated in English version. The
English documents is limited and
translated only for special purpose.
13 Can small
shareholders have
opportunities place
an items or rise
issues on the AGM
agenda?
NO Company
Charter
Company Charter, Article 17
“Convention of the General
Meeting of Shareholders, agenda
and notice of the meeting,” item 4.
There are only allow shareholder
who own at least 5% would have
right to propose or place items and
issues on the AGM agenda.
An alert to conflicts of interests, insider trading and self-dealing actions
14 Are there policies in
monitoring,
managing and
prohibiting potential
conflicts of interests
YES Company
Charter
Although the company does not have
clear and effective policy about
dealing with conflicts of interests,
the Company Charter give an
instruction on how the conflicts

25
of management,
directors, and
shareholders?
could be solved. (Article 53
“Settlement of Internal Disputes”,
item 1, item 2, and item 3.
15 Does the company
provide effective
restrictions on
insider trading and
self-dealing
according to the
laws?
YES Company
Charter
The purpose of insider trading and
self-dealing actions are intended for
interests. Thus, the restriction and
avoidance for conflicts on those
issues is important for the sustainable
development of the company. The
concept of restrictions are stated in
Article 33“The duty of Honest and
avoidance of conflicts of interests”,
Related party transactions
16 Does company
policy require the
disclosure on the
related party
transactions?
YES Annual
Report
The related party transactions are
fully provide on the Annual report,
“The consolidated financial
statements, section 28, Related Party
Transaction and Balance.”
Part 3: The Role of Stakeholders
No. Questions Answer Source Reference
The protection and recognition on stakeholder interests
1 Are there full
recognition of
company obligation
to their stakeholders
(including in law and
mutual agreement)?
YES Annual
Report
The Annual Report is reflects all
aspects related to the company
obligations to their key stakeholders:
employees, customer, and
shareholders. The Annual Report has
separate section for accessing to
stakeholders:
- “Employees connectedness
through mutual alignments.”
- “Customer connectedness
through product quality.”
- Shareholder connectedness

26
through growing values.”
2 Does the company
provide effective
policies for
protecting/enforcing
stakeholder legal
right from violation
and obtaining
reasonable redress?
NO Annual
report
Company
Charter
There are not evident documents
publicly for specific company
policies for enforcing stakeholder
legal right from violation and
obtaining reasonable compensations.
of clear and effective
communication
procedure among
stakeholders?
NO The company have no evidence for
the motivation of stakeholder
effective communication.
Company obligations and employee benefits
4 Does the company
provide effective
benefits as well as
explicit disclosures
on the health, safety,
and welfare policy
for its employees?
YES Annual
Report
The benefits of employees are fully
provided in the Annual Report
(“Labor Policy for Employees”
section) in such main aspects:
compensation, training, healthcare,
and safety.
5 Does the company
have policy to
protect stakeholder
form illegal or
unethical issues?
NO The company have no available
document of policy on protecting
stakeholder form illegal or unethical
issues. It could not be found on
public.
6 Does the company
ensure the
enforcement of
creditor’s right?
NO Annual
Report
Although the company provide
financial report with detail in the
Annual Report, the actual rights of
creditors are not fully mentioned.
Annual report year 2013
Benefits to the environment and the community
7 Do company policies
and information
mention the
YES Annual
Report
Company
The responsibilities to the
environment and the community are
the long-term company objective

27
environment and the
community?
website mentioned in “Traphaco and Social
Responsibilities” section, page 108.
Traphaco – The way of Green Health
Part 4: Disclosure and Transparency
Annual report
1 Does the company
provide a full, clear
and comprehensive
financial
performance of the
company which
disclosed timely
manner on the
Annual report?
YES Annual
Report
A financial information is fully given
by the report of BOD, report of SD
and report of BOM.
- Report of BOD: page 27-28
- SB report: page 41
Other sections: Consolidated Balance
Sheet, Consolidated Income
Statement, Consolidated Cash Flow
Statement, and Notes to the
consolidated financial
Statements.
“Annual Report year 2013.”
2 “Do the CEO and
Chief Accountant
certify the annual
financial statements,
audited and
unaudited?”15
YES Annual
report
There is certifying of the General
Director on the consolidated cash
flow statement.
“BOARD OF DIRECTORS’
STATEMENT OF
RESPONSIBILITY”, Annual
Report year 2013, page 71
that the company
used an
NO Annual
Report
Based on the “INDEPENDENT
AUDITORS’ REPORT” performed
by Deloitte Vietnam Company
15

28
internationally
accepted accounting
standards?
Limited, the company accounting
standard is “accordance with
Vietnamese accounting standards,
accounting regime for enterprises
and legal regulations relating to
financial reporting.”
4 Does the company
provide a full and
clear picture of
company operation,
including
commercial and non-
commercial
objectives?
YES Annual
Report
The commercial objectives are
clearly and effectively provided in
the “Report of Board of Director”
which are specific in targets, new
financial investments, and new
projects.
The objectives on non-commercial
activities is also mentioned including
investment in human resources,
training programs, and building the
company culture “Traphaco – The
way of Green Health.”
Annual Report year 2013 (page 34-
36).
5 Are the ownership
data related to
shareholding of
BOD, SB, senior
management and
major shareholders
clearly disclosed?
YES Annual
Report
The ownership BOD, SB, senior
management and major shareholders
are well disclosed on the “2014
Shareholder Information.” This
section include detail data about
number of shareholders, number of
shares, par value and percentage of
ownership. Annual Report year 2013
(page 63)
6 Are the board
member experiences
and qualifications
disclosed in the
Annual report?
YES Annual
Report
The profile of board members are
well described with detail and
comprehensiveness related to
qualifications, knowledge and
experiences. Annual Report year
2013 (page 58-61).
7 “Does the Annual
Report disclose
YES Annual
Report
The attendance of individual
directors are provided in the “Report

29
BOD / SB meeting
attendance of
individual
directors?”16
of by Supervisory Board.” Annual
report (page 41).
8 Does the
independent director
effectively
identified?
NO Annual
Report,
Resolutions
of Traphaco
Annual
Shareholder
s Meeting,
held on 29
March 2013
The independent director is not
identified in the Annual Report 2013
and even on the Resolutions of
Traphaco Annual Shareholders
Meeting, held on 29 March 2013.
It is obvious that the company does
not have independent director.
9 Does board
remuneration
information and
policy being
disclosed in the
Annual report?
NO Annual
Report
The remuneration (in data) is
available in the report on
consolidated financial statement.
However, there is not observed
remuneration policy for explaining
how the remuneration is built or
taken from. Annual Report year
2013.
10 Does the dividend
policy are disclosed
on the Annual
report?
YES Annual
Report
The dividend policy is stated in the
Annual Report (page 108). Specific
policy statement “Pay dividends to
shareholders or allocate to retained
earnings for developments in each
period depending on the resolutions
of the annual shareholders meeting
(the dividend payout ratio is 20% of
chartered capital).”
11 Does the company
fully explain and
manage foreseeable
business risk factors
YES The risk management strategy is well
managed by the company. The detail
information related to foreseeable
business risk factors mentioned in
16

30
in the Annual report? the Annual Report, with specific and
comprehensiveness (page 36-39).
Disclosure on related party-transactions
12 Does the company
provide a timely,
comprehensive and
public disclosure
information of
related-party
transactions?
YES Annual
Report
The information on related-party
transactions is fully provided on the
consolidated financial statement,
section 28. The information includes
name of related party, sale and
capital distribution and specific
dividend to shareholder for each
transaction. Annual Report (page
103-104).
CG report perspectives
13 Is the CG report
perspectives
recognized with
quality evaluation?
NO Annual
Report
The CG report is not fully mentioned
in the Annual report, the section for
CG report is not provided. There are
only parts of the CG report are
disclose throughout the Annual
report and are not well described in
comparison with the OECD standard.
External audit and audit activities disclosures
14 Does the company’s
financial statement
being audited by
external auditor?
YES Annual
Report
Resolution
of Traphaco
AGM
The company financial statement is
audited from external auditor, the
Deloitte Vietnam Limited Company,
Annual report year 2013 (page 73).
Resolution of Traphaco AGM,
Article 5. It states that the AGM
have been approved in selecting the
Deloitte Vietnam Limited Company
as their external auditor.
15 Are there documents
that require a
selection of
independent external
auditor?
YES Company
Charter
The company Charter, Article 47,
item 1, item 3. It states that the
company must appoint an
independent auditor company “that
lawfully operates in Vietnam and is
accepted by the State Securities

31
Commission for auditing the listed
companies shall be designated to
audit the Company for the
subsequent fiscal year.”
16 Does external
auditor evaluation
and recommendation
on company
financial statement
disclosed?
YES Annual
report
The “Independent Auditor’s Report”
is included on the Annual report,
which show the auditor evaluation
and recommendation on company
financial statement. Annual Report
(page 73).
that the external
independent Auditor
attend the AGM and
express their opinion
on company
financial issues
NO Resolution
of Traphaco
AGM
Minute of
AGM
Annual
Report
There are no observed sections in
those documents for evidence of the
attendance of independent auditor.
Information disseminating
18 Does the company
website provide
comprehensive,
accessible, and
updated
information?
YES Company
website
The company website generally
provide all key documents related to
the AGM, financial information and
others.
provide easy public
access to and contact
details for the
Investor Relations
person or unit?”17
YES Situation on
Corporate
Governance
The company disclose the listed of
contact detail of their shareholder on
the company site, which is part of the
“Situation on Corporate Governance
the first six months of year 2014”.
However, the List is only full access
for internal shareholder and it is
partly uncovered when being public
on the website.
17

32
Part 5: The Responsibilities of the Board
Board basic responsibilities
1 Are the roles of BOD
explicitly stated?
YES Company
Charter
Company charter, Article 32:
Fiduciary duties of members of the
Board of Management, the General
Director and Managers.
It is stated that “Members of the
Board of Management, the General
Director and the Managers shall be
entrusted with the responsibility to
perform their tasks, including tasks
performed in their capacity as
members of sub-committees of the
Board of Management in an honest
manner and by modes that they deem
are in the best interests of the
Company….”
2 “Does company CG
guidance disclose the
material transactions
that must be approved
by the board?”18
YES Company
Charter
The company Charter, Article 25:
Rights and duties of the Board of
Management.
Based on the Article, the Board have
duties to approve the material
transactions.
Leadership role of the chairman
3 Does the company
clearly state the role of
the chairman in the
CG guideline?
YES Company
Charter
The role of the chairman is stated
that “The Chairman of the Board
of Management shall have to
convene and preside over the
General Meeting of Shareholders and
meetings of the Board of
Management , and at the same time
shall have other rights and duties
prescribed in this Charter and the
18

33
Law on Enterprises.” Company
Charter, Article 26: Chairman and
Vice Chairman of the Board of
Management.
4 Are there evidences
that the chairman is a
non-executive and
independent director?
NO It is not observed that the chairman
of the company is as a non-executive
and independent director.
Skills, competences and effectiveness of Board
5 “Does company
information and
director information
clearly state/disclose
the number of board
seats each director
holds?”19
YES Annual
report
Company
Charter
The company charter, Article 24:
The number and office term of
members of the Board of
Management.
The disclosure on information
related to number of board seats each
director are mentioned in the Annual
report, where full descriptions are
provides on this issue.
6 How many of BOD
are independent
directors?
NO Annual
Report
The information on the Annual
Report does not show the number of
independent directors. It would be
concluded that the company does not
have the present of “independent
directors.”
7 Does the company
have induction policy
and orientation
programs for new
appointment
directors?
NO Company
website
Annual
Report
There are not evident documents
fulfilling the aspects of induction
policy and orientation programs for
new appointment directors available
on the website or mentioned in the
Annual Report.
8 Does the company
have encouraging
policy for BOD and
NO There are no available information
on an encouraging policy for BOD
and SB taking an annual self-
19

34
SB taking an annual
self-assessment
evaluation?
assessment evaluation.
Board effectiveness referring information, meetings and records
that BOD and SB have
a regular meeting
schedule?
YES Annual
Report
There are observed information that
there a regular meeting schedule of
BOD and SB.
Report of the Board of Director,
there is a report that “The Board of
Directors maintained a meeting
schedule of once a month and held
extra-ordinary meetings when issues
arose. Members of the Board are
assigned with clear accountabilities.”
On SB reports: “The Supervisory
Board participated in all regular and
extraordinary meetings of the Board
of Directors to get updated on
Traphaco’s business performance.”
Annual report year 2013, (page 31
and page 42)
10 “Are there
mechanisms in place
to ensure board
members receive
adequate notification
of the board meeting
for all BOD / SB
meetings?”20
YES Company
Charter
The adequate notification of the
board meeting for all BOD / SB
meetings is mechanism the Company
Charter, stated in Article 27, item 7:
Meeting notices and agenda.
11 Are there the
requirement of 2/3 on
quorum for board
decisions?
NO Company
Charter
The company applied voting on
majority, that is “the approval of
the majority of the present
members of the Board of
Management (more than 50%).”
20

35
11.
12 Do all meeting
minutes and
resolutions in every
meeting being
recorded for
disclosure purpose?
YES Company
website
Annual
report
14. It requires that all decisions on
the meeting should be regularly
written and recorded.
The SB report show mentioned that
“all minutes and resolutions in every
meeting are well disclosed and
complied with regulations.”
Annual report year 2013, page 42.
Board effectiveness referring to company strategy, risk, and oversight
13 “Is there evidence that
the BOD receives
regular management
reports on the
company activities
and its financial
position?”21
YES Annual
Report
The BOD have received the regular
reports for proving the role of
controlling and managing the
company. Report of BOD on the
Annual Report is totally based on
those regular management reports on
the company activities and its
financial position.
Annual report year 2013, “Report
of Board of Director.
14 “Is there evidence the
BOD is responsible
for the strategy and
business plans of the
company?”22
YES Annual
Report
Company
Charter
The BOD has responsibility of report
all issues that related to the operation
and the prospects of the company.
Thus, the BOD is responsible for the
strategy and business plans of the
company.
Annual Report, page 28-31.
Moreover, it is stated in the company
21
22

36
Charter that BOD have responsibility
to the Company’s business
activities and its affairs.
Article 25: Rights and duties of the
Board of Management, item 3.
15 “Are the BOD/SB be
responsible for and
oversee the risk
management system
of the company?”23
YES Annual
report
It is stated that “With the intention to
manage risk effectively, the Board of
Directors issued the decision
numbered 45/QĐ-HĐQT dated 01
August 2013 to authorize the
formation of the Risk Management
Department.”
Annual report year 2013, page 36.
Auditing
report on the activities
of internal audit in its
Annual Report and /
or SB Report?”24
YES Annual
Report
The Internal audit report is available
on the SB report. The function of
internal audit is also well informed
through the report including such
issues “business activities, financial
health, risk management and the
assessment and coordination among
Board team and shareholders.
Annual report year 2013, page 40-
43.
Supervisory Board role
17 “Does the SB report
include discussion of
the SB supervision of
operational and
financial condition of
the company;
performance of BOD,
YES Annual
report
Basically, the SB report provides a
detail and comprehensive contents
related to discussion of the SB
supervision of operational and
financial condition of the company;
performance of BOD, BOM and
executive officers.
23
24

37
BOM and executive
officers?”25
Annual Report year 2013, page 40-
43.
18 “Does the SB Report
include reference to
the SB’s performance,
issues discussed and
decisions taken?”26
NO Annual
Report
Although the SB report take an
assessment to SB’s performance,
issues discussed and decisions taken,
it does not include effective
references. This lead to an
ambiguousness on some aspects of
the SB report.
19 “Does the SB report
on its evaluation of
the coordination
between the SB,
BOD, BOM and
shareholders?”27
YES Annual
Report
It is mentioned in section
“Assessment of Coordination
between Supervisory Board with the
Board of Director, Management
Team and Shareholders.”
Annual Report year 2013, page 43.
25
26
27

38
D. Discussion and Conclusion
I. Overall Performance
The table below shows overall average corporate governance of the Traphaco Joint Stock
Company is 69.1%, which is considered a good CG performance based on the OECD
standard. It is observed and evaluated from all available information collected from the public
data of the Traphaco’s company.
No. Category
Number
of
questions
Weight
(% of
total
score)
Questions
scored
Measured
Score (%)
Differential
score (%)
(Weight
score –
measured
score)
1
The rights of
shareholders
17 20 13 15.3 4.7
2
Equitable
treatment of
shareholders
16 15 11 9.4 5.6
3
Role of
stakeholders in
corporate
governance
7 5 3 2.1 2.9
4
Disclosure and
transparency
19 25 14 18.4 6.6
5
The
responsibilities
of the board
19 35 13 23.9 11.1
6 Total 78 100 53 69.1 30.9
The chart on Traphaco CG performance (chart 1) shows the comparison of initial weighting
score and the performance of the company. Based on that, the four categories includes Right
of Shareholder, Equitable treatment of Shareholder, Disclosure and Transparency, and the
Responsibility of Board perform above average (compare with weight of total score). It
indicates that the company application of SG regulatory framework is close to good practice

39
demanded by the OECD standard. The differential score shows that the right of shareholders
category have the highest performance and the lowest one is the responsibilities of the board.
The remaining category, which is Role of stakeholders, performs under the average. This
shows a weak in stakeholder management of the company in particular and in many other
Vietnamese company in general.
II. Discussion
1. The rights of shareholders
No. Category
Number
of
questions
Weight (%
of total
score)
Questions
scored
Measured
Score
(%)
Differential
score (%)
1
The rights of
shareholders
17 20 13 15.3 4.7
There are 13 question scored out of 17 and account for 15.5% compared with 20 assigned
weighting score. Compare with other categories, the rights of shareholders at Traphaco are
well exercised with the different score is 4.7.
The company provides almost full basic rights to their shareholders as stated in the Charter
such as right to vote on company issues and director nomination, right to receive appropriate

40
and timely dividend and right to obtain information related to the operation of the company.
It is evident that shareholders are effective and convenient in participating the AGM with
clear, comprehensive and timely notice. The effectiveness and process of the AGM is assured
with a clear agenda for shareholder’s involvement in rising issues or proposals, the full
report, minutes and resolutions of the AGM are also fully provided on the company website.
Regarding areas for improvement, the company fails to provide accurate information on
remuneration policy as well as not promote the external auditor appointment right to
shareholders.
2. Equitable treatment of shareholders
No. Category
Number
of
questions
Weight (%
of total
score)
Questions
scored
Measured
Score
(%)
Differential
score (%)
2
Equitable
treatment of
shareholders
16 15 11 9.4 5.6
This category has the second highest CG performance in comparison with the remaining four
categories based on the different score, which is 5.6 point. Overall, the company basically
fulfills the requirement for Equitable Treatment of Shareholders – according to OECD
Principle III. These fulfillments include the providing an equality on share’s right and single
vote per share, transparency in company structure and redress policy, approval of
shareholders toward company significant changes, and awareness from conflicts of interests,
insider trading and self-dealing actions.
However, the company need to put significant effort in improving the rights of minority and
cross boarder shareholder in practical application related to propose company’s key issues
and protected from abusive actions. In addition, English version of company official
documents should be provided and updated on the website.
3. Role of stakeholders in corporate governance
No. Category
Number
of
questions
Weight
(% of
total
score)
Questions
scored
Measured
Score (%)
Differential
score (%)
3
Role of
stakeholders in
corporate
7 5 3 2.1 2.9

41
governance
The company have performed poorly (below average with 2.1% compare with 5%) in
promoting roles of stakeholder relating to corporate governance perspective. Strengthening in
protecting and enforcing stakeholder legal right from violation, illegal or unethical issues,
obtaining reasonable redress are strongly suggested for the company. Besides that,
communication and relationship amongst stakeholders as well as enforcement of creditor’s
right needed for improvement. Regarding on good practices, the company has shown
obligations to their stakeholders (including in law and mutual agreement) and disclosures on
the health, safety, and welfare policy for its employees which are observed in the Annual
report.
4. Disclosure and transparency
No. Category
Number
of
questions
Weight
(% of
total
score)
Questions
scored
Measured
Score (%)
Differential
score (%)
4
Disclosure and
transparency
19 25 14 18.4 6.6
Based on this finding, there is two-third of the questions assuring for disclosure and
transparency which account for 18.4 percentage. In comparison with the requirements on
“Circular No. 52/2012/TT-BTC”28
, the company provides full and basic disclosure on the
Annual report related to such issues business operation, reports of BOD, BOM and SB,
financial statement reports, and senior management team profile/background. In addition,
information on related party-transactions is also provided with detail and comprehensive
manner. Information dissemination is well managed with variety of corporate governance
documents uploaded on the website and available for downloading.
In contrast with these good practices, the company still have areas for improvement. There
are not have an identify of independent director or an explanation of specific director to be
independent. Remuneration and benefits of board are not disclosed or descriptive in the
Annual report and the attendance of external independent Auditor at the AGM is not
observed.
28
Circular No. 52/2012/TT-BTC dated April 05, 2012 of the Ministry of Finance guiding the disclosure of
information on securities market.

42
5. The responsibilities of the board
No. Category
Number
of
questions
Weight
(% of
total
score)
Questions
scored
Measured
Score (%)
Differential
score (%)
5
The
responsibilities
of the board
19 35 13 23.9 11.1
It indicates that responsibilities of the board has the biggest differential score in comparison
with other categories (11.1%, Chart 1). The gap is remarkable that the responsibility of board
is not performed well in some aspects according to CG good practices.
The improvement should be placed on the independence of board which not fully described
in the Charter or mentioned in the Annual report. The independence of board is critical for
the corporate governance. However, there is not well observed implementation of
independent directors according to The Circular 121/2012. It states that “there should be a
strong and independent element on the Board, which is able to exercise objective judgement
on corporate affairs independently. No individual or small group of individuals should be
allowed to dominate the Board's decision making.”29
Company reports generally does not
includes effective references and the policy on board training program, self-assessment and
orientation program are not mentioned in detail.
Regarding good practice areas, profile and qualification of Board are detail disclosed, the role
of Board is well sated in the Company Charter for responsibility to the company
performances and stakeholder interests. BOD have regular meeting discussing on company
issues with clear notices or report recorded. The reports of BOD, SB and BOM are
transparent and available on the Annual report. In addition, the company have well risk
management strategy which is comprehensive analysis and mitigation.
III. Conclusion
Traphaco basically achieves a good corporate governance practice with well fulfillments on
fundamental principles stipulated by OECD. However, the company still needs a general
improvement on aspects that are poorly performed. The concept of corporate governance is
“still nascent to companies in Viet Nam”30
leading to the low understandable and applicable
29
Cicular No. 121/2012/TT-BTC dated July 06, 2012 of Ministry of Finance in prescribing the company
management applicable to public company.
30
ASEAN Corporate Governance Scorecard, country report and assessment 2013-1014, p.82.

43
good corporate governance practice in certain perspectives of Vietnamese companies. This is
the reasons for low scores in Vietnamese company CG assessment in general and Traphaco in
particular. Basic recommendation for the Traphaco in improving and applying the good CG
practice:
 Strengthening the functions of BOD in promoting the best practice of corporate
governance in the company.
 Enhancing the awareness of stakeholders of the concept of corporate governance by
professional training programs.
 Accessing global corporate governance standards and guidelines in managing and
controlling the company in such issues: financial management, auditing activities,
transparent information, and effective and reliable reports.

44
E. Appendix
Key of documents used
No. Document
1 Charter of Traphaco Joint Stock Company
2 Traphaco Annual Report year 2013
3 Governance guidelines of Traphaco Joint Stock Company
4 Resolutions of Traphaco AGM year 2013, year 2012
5 Minutes of Traphaco AGM year 2013, year 2012
6 AGM Notice year 2014, 2013, 2012
7 Guidelines and Working Agenda of the AGM year 2014, 2013
8 The duty of Honest and avoidance of conflicts of interests, Traphaco
company

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