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Thailand Corporate Governance Code – Overview and Summary of Requirements

By: Staff Editor
Date: March 08, 2013

The Thailand Corporate Governance code was published by the Stock Exchange of Thailand. It was revised in 2006 and this article gives a brief overview and summary of requirements included in the code:

Rights of Shareholders

Shareholders’ rights should be included in the corporate governance policies of companies
The basic rights of shareholders include the right to:
- buy, sell, or transfer shares
- share in the profit of the company
- obtain relevant and adequate information on the company in a timely manner and on a regular basis
- participate and vote in the shareholder meetings to elect or remove members of the board, appoint the external auditor
- make decisions on any transactions that affect the company, such as:
  - dividends payment,
  - amendments to the company’s articles of association or the company’s bylaws,
  - capital increases or decreases, and
  - the approval of extraordinary transactions
The shareholders should be fully informed of the criteria and procedures governing shareholders meetings as well as about the issues to be decided in each agenda item.
The shareholders can query directors both in the meeting and by sending their questions in advance.
The shareholders should be allowed to propose an agenda item and vote by proxy.
All directors should attend shareholders’ meetings

Equitable Treatment of Shareholders

All shareholders, including those with management positions, non-executive shareholders and foreign shareholders should be treated equally
The board of directors should ensure that all shareholders rights are protected and that they all get fair treatment.
The board should help minority shareholders propose any considerations during shareholders’ meetings.
There should be a clear procedure to allow minority shareholders to nominate candidates for director positions.
Shareholders who cannot vote in person should be allowed to vote by proxy. The board should give shareholders proxy forms in which to register their votes
The board should set procedures to prevent the use of inside information for such abuses as insider trading or related party transactions.

Role of Stakeholders

The board of directors should set a clear policy on fair treatment for each and every stakeholder.
The board should identify each set of stakeholders and their legal rights
The rights of stakeholders that are established by law or through mutual agreements should be respected.
Any actions that can be considered in violation of stakeholders’ legal rights should be prohibited and any such violation should be effectively redressed.
The stakeholders should be involved in improving the company performance.
All relevant information should be shared with the stakeholders.
Stakeholders should be able to communicate to the board any concerns about illegal or unethical practices, incorrect financial reporting, insufficient internal control and so on.
The board of directors should set clear policies on environmental and social issues.

Disclosure and Transparency

The board of directors should ensure that all important financial and non-financial information relevant to the company is disclosed correctly, accurately, on a timely basis and transparently through easy-to-access, fair and trustworthy channels.
In addition to disclosing information through the Stock Exchange of Thailand’s channels, annual statements and reports, companies should disclose information in both Thai and English through means such as company websites and so on.
The board of directors should ensure that all the information presented in the financial reports are correct and in accordance with generally accepted accounting principles and standards (GAAP),
Financial statements and reports should be audited by an independent external auditor.
The chairman of the board and the managing director (MD or CEO) should act as the spokespeople for the company.
The board should publish its corporate governance policy through channels (such as company website) that the public can access
The board should provide a statement of its responsibilities relating to the company’s financial reports. This statement should be included along with the auditor’s report in the annual report
Board roles and responsibilities as well as roles and responsibilities of board committees should be disclosed
Board members’ compensation and benefits should be disclosed
In addition, the board of directors should designate a person or a department to perform the “investor relations” function to communicate with outsiders such as shareholders, institutional investors, individual investors, analysts, the related government agencies, etc.

Responsibilities of the Board

The board is accountable to shareholders and is independent of management.
The board should clearly separate its roles and responsibilities from those of management.
The board should monitor the company’s operations to ensure all activities are conducted in accordance with relevant laws and ethical standards.
The director nomination process should be transparent, without any influence of controlling shareholders or management, and be credible to outsiders.
The board of directors should set up committees to study and screen special tasks on their behalf, especially issues that need unbiased opinions.
All the board of directors should understand their roles and responsibilities and the nature of the company’s business.
The board of directors should be ready to express their ideas independently and always update themselves.
The board of directors should perform their duties in good faith, with due diligence and care, in the best interest of the company and all shareholders.
The board of directors should also commit themselves to their responsibilities and attend all board meetings, except for reasonable excuse.
The board of directors should not approve its own remuneration. The process of setting their remuneration should be transparent.
Shareholders should approve the structure of board, number of members and directors’ remuneration.
Director’s term of service should be part of corporate governance policy
The chairman of the board should be an independent director
The board should approve company vision, strategy, financial targets, risks and so on.
Corporate governance policy must be set up and maintained by the board.