CORPORATE GOVERNANCE CASE STUDIES | CAMBODIA
The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a
violation of applicable law. IFC encourages dissemination of its work and will normally grant permission to reproduce portions of
the work promptly, and when the reproduction is for educational and non-commercial purposes, without a fee, subject to such
attributions and notices as we may reasonably require.
IFC does not guarantee the accuracy, reliability or completeness of the content included in this work, or for the conclusions or
judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation,
typographical errors and technical errors) in the content whatsoever or for reliance thereon. The boundaries, colors,
denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank
concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The findings, interpretations,
and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the
governments they represent.
The contents of this work are intended for general informational purposes only and are not intended to constitute legal,
securities, or investment advice, an opinion regarding the appropriateness of any investment, or a solicitation of any type. IFC or
its affiliates may have an investment in, provide other advice or services to, or otherwise have a financial interest in, certain of the
companies and parties (including named herein).
International Finance Corporation is an international organization established by Articles of Agreement among its member
countries, and a member of the World Bank Group. All names, logos and trademarks are the property of IFC and you may not use
any of such materials for any purpose without the express written consent of IFC. Additionally, “International Finance
Corporation” and “IFC” are registered trademarks of IFC and are protected under international law.
Amret Co.is a leading microfinance institution in
Cambodia serving micro, small and medium enterprises and
low-to-middle-income populations with a focus on rural areas,
agriculture and district and provincial cities. Amret was
launched in 1991, and obtained a license to operate as a
deposit-taking MFI in 2009. Today, it provides a wide range of
loan and deposit services to Cambodia women, farmers, small
businesses, and households
charters with terms of reference to guide the decision-making
process. The composition of the Board required some
diversification and recruitment of independent members with
strong commercial banking acumen and a deep knowledge of
the local market. Additionally, Amret was looking to improve
the way it handled related party transactions and establish
clear policies to protect minority shareholders and eliminate
conflicts of interest.
|As one of the top three MFIs in Cambodia, with a nationwide
presence across 197 districts, Amret provides financial
products, including solidarity credits, individual credits, SME
loans, savings accounts and term deposits, to more than
400,000 clients through 156 branches, with more than US$
350 million in outstanding deposits and more than US$ 668
million in outstanding loans by 2017.
WHAT DID THEY CHANGE?
In March 2014, IFC evaluated Amret’s governance capabilities.
Even prior to IFC’s involvement, Amret’s board and executive
leadership demonstrated their strong commitment and
adherence to good governance beyond compliance with local
regulations. The IFC evaluation aimed at helping Amret further
enhance the board’effectiveness, optimize management
controls, improve disclosure policies and practices, and develop
provisions on shareholder’s rights.
|Its goal is to provide a wide-range of tailored financial
solutions for low income people, including micro, small and
medium enterprises, in order to improve the living standards of
the population and contribute to the economic and social
development of Cambodia. Amret is a subsidiary of Advans SA,
a global network of microfinance institutions across 9
countries. Advans supports Amret in refining its governance
practices and improving its organizational effciency. Since
2013, Amret has pioneered loan products in the AgriFin and
Fintech space. It rolled out mobile financial services and was
awarded grant funding from the UN Capital Development
Fund to expand women’s financial inclusion through digital
finance. Over the years, Amret has adapted its strategy to
minimize risk through concentrating its lending activities on
areas less affected by over-indebtedness, which has in turn
helped maintain a good loan portfolio quality and improved
Management advanced on its already impressionable CG
improvement program by reinforcing governance practices
and raising the bar to align with international standards.
Authorities were better clarified between the Board and
Management. Prior to IFC’s assessment, Amret established an
Audit Committee, chaired by an independent director who was
nominated by minority shareholders, which met 4 times
annually to review internal and external audit functions and
ensure compliance with local laws. Additionally, more
independent directors with commercial banking, risk
management, and local market experience were recruited to
improve the Board’s composition and effectiveness of the
committees. The company also went above and beyond to
strengthen its internal control and risk management systems
with the establishment of a Risk Oversight Committee which
oversees four management committees that assess credit,
operational, strategy, and asset & liability risks.
Amret was committed to the principles of good governance as
demonstrated by the strong risk and control frameworks that
were embedded in the organization prior to IFC’s assessment.
The Board was engaged in the stewardship of the company
which contributed to a strong management structure across
the organization. In addition, the company was in compliance
with applicable regulations for MFIs in Cambodia. Although
Directors were engaged in setting strategy, there was not a
formal authority matrix or formally documented board
Furthermore, the Board codified its CG policies, developed
remuneration and evaluation procedures, and made an effort
to eliminate conflicts of interest with respect to related party
transactions and procurement practices with technical
vendors. With a strong CG foundation, Amret was a
benchmark for other financial institutions in Cambodia and
perceived as more transparent and investor-friendly. This
culminated in receiving A- ratings from international rating
agencies including MicroFinanza and MicroRate.