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Shareholder contests board election

Update: July, 17/2012 - 09:35

HA NOI — Building contractor 565 Construction Co (NSN) has violated regulations on appointment of its board of management, claims disgruntled minority shareholder Leadvisors Capital Management, which holds an 11-per-cent interest in NSN.

Leadvisors aired its complaint in an interview with the publication Dau tu Chung khoan (Securities Investment), claiming that, while the company charter of NSN requires that at least a third of board members be independent, all five members appointed on July 10 for the 2012-17 term were holders of key executive positions within the company.

Leadvisors asked for new board election but was rejected, NSN management claiming that "all board members are independent as they are not governing at the time."

Yet Leadvisor said, at the time of election, all five members were entitled to wages and other compensation from the company and could not be considered independent. Independent board members must not receive salaries other than payment for their board services and must have no material relationship with the company or its subsidiaries, it said.

Leadvisors wrote to both NSN and its parent company, Truong Son Corporation, asserting that move was unlawful. While Leadvisors said it did not intend to participate in governance of NSN, it nevertheless said that maintaining independent, non-executive board members would ensure compliance with the law and creating a monitoring mechanism to ensure the rights of shareholders.

NSN chairman and director Nguyen Manh Toan said that, although the selection did not meet the criteria of the company charter, it was legitimate as a majority of shareholders had approved the election.

"During the previous term, all board members were introduced by Truong Son Corporation," Toan said. "There were no independent board members, but everything still worked out fine."

Meanwhile, one of the new members had already resigned and was currently working as an assistant to the director. — VNS

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