The vast majority of local companies lack corporate governance standards and provide insufficient business information, requiring investors and regulators to do heavy due diligence work that stops businesses from tapping into additional funding sources, officials said yesterday.

Speaking at the opening of a two-day education seminar on corporate governance and transparency, Sou Socheat, director of Securities and Exchange Commission of Cambodia (SECC), said that strengthening corporate governance in the private sector was crucial for the Kingdom’s economic growth. He added that if more companies adopt international corporate governance principles, it could spur more listings on the sluggish Cambodia Securities Exchange (CSX).

“There are some companies starting to strengthen their corporate governance, especially publicly listed companies, but the number is still tiny,” he said. Besides the four listed companies on the CSX that are legally bound to international norms, he added that the Kingdom’s banks performed well in terms of best practices. However, small- and medium-size enterprise clearly lacked transparent reporting and accounting principles.

“Once there are more companies strictly implementing corporate governance, it will help boost the number of listed companies on the stock market because they will easily comply with our own standards,” he said.

Over the years, the SECC has partnered with numerous development partners in an attempt to raise awareness of the benefits of corporate governance.Yesterday’s event was supported in partnership with the OECD Southeast Asia Corporate Governance Initiative – an institution that aims to support the development of effective corporate governance to promote inclusive growth.

Lamun Soleil, director of market operation department at the CSX, said that corporate governance principles enables a company to access additional funding sources as capital providers trust transparent businesses.

“The stock market requires that companies have good corporate governance, mainly to build trust from investors,” he said. “There should be a strong correlation between the number of companies listed and the success of stock market.”

In Channy, president and CEO of Acleda Bank, said that registered and tax compliant companies need to have clear financial reporting standards and a proper management structure.

“We need to have corporate governance to have good relationships with our investing partners,” he said. “We try to work with companies we provide lending to in order to strengthen transparency and build public trust.”