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Survey on Ease of Doing Business by World Bank

​​​​Doing Business 2020 Thailand - Overall Ranking

The Ease of Doing Business (EoDB) report by the World Bank Group ranks economies based on their performance on 10 indicators throughout the business lifecycle. The World Bank collects data from a survey completed by expert respondents namely government officials, private sectors, and World Bank’s regional staffs on the implementation of relevant laws and regulations in practice to assess business environment in each economy. In its Doing Business 2020 report, the World Bank Group ranked Thailand 21st among the 190 participating economies worldwide on the overall assessment.​

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Protecting Minority Investors

The SEC office has involved and supported in the Protection of Minority Investors Topic along with the Department of Business Development, the Ministry of Commerce. This topic measures the strength of minority shareholder protection against directors' misuse of corporate assets for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements for listed companies. Positive results on this topic promote investors' confidence which would benefit businesses, the capital market and Thai economy.  The index and description are as follows:

 

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Legal Protection and Key Developments

Thailand's ranking in Protecting Minority Investors has risen from the 15th to 3rd this year with
the ease of doing business overall score of 80.10%. Compared with other East Asia & Pacific economies, Thailand and Singapore are at the 2nd place while Malaysia is in the lead.
The higher ranking based on the Protecting Minority Investors Index was due to the initiative on communication strategy. By using a conference call with the World Bank assessors in Washington D.C., the Thai SEC, together with the Court of Justice and the Department of Business Development, the Ministry of Commerce, were able to clarify and create better understanding of the application and the spirit of the relating Acts and regulations made thereunder.

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Reformation and Legal Framework

​Extent of director liability index

Thai law protects the right of minority investors to bring an action against any director who acts or omits to act in any way that constitutes a failure to perform duties with responsibility, due care and loyalty for the best interest of the company, which causes damage to the company or creates benefits for oneself or others. In this regard, shareholders are entitled to claim on the company's behalf for damages or returns of benefits that such director had received as a result of his/her misconduct. In addition, the criminal and civil sanctions prohibit such director from holding the position at any listed company. The SEC also proposed amendment to the Public Limited Companies Act B.E. 2535 (1992) to prohibit any company from exempting the liability of any director who fails to perform duties with loyalty and due care for the company's best interest. The amendment would also require that the company claim indemnity from such director.

Extent of shareholder suits index

If a shareholder intends to bring an action against the company or the board of directors, the shareholder shall comply with the Civil Procedure Code, which prescribes the procedures for filing a civil lawsuit. In this regard, the Law clearly prescribes that the plaintiff is entitled to adduce evidence by specifying only the categories of documents without the need to identify specific details on the evidence list. Besides, the Law requires only the procedure for taking evidence by the plaintiff and the defendant, i.e., the sequence of examination, cross-examination and re-examination. In case of witness examination, there is no statutory requirement for the court to grant a prior approval. Such supportive conditions allow shareholders to exercise the right to enter a legal action more conveniently.

Extent of shareholder rights index

This extent measures shareholders' rights and role in major corporate decisions. 
To satisfy this indicator the SEC along with the relevant authorities proposed amendment to the Public Limited Companies Act B.E. 2535 (1992) to modernizing electronic systems, which enable the delivery of documents (e-delivery), proxies (e-proxy) and advertisements on shareholder meeting. This would allow shareholders to take part in shareholder meetings more easily and promote the exercise of voting rights to control, monitor and participate in the decision making on important matters.

UPDATE: At present, the Emergency Decree on Electronic Meetings B.E. 2563 (2020) (“Emergency Decree on E-Meetings") recognizes board of directors and shareholder meetings via electronic means. The Emergency Decree on E-Meetings also allows the e-delivery of invitation and supplementary documents to the e-meeting.

The SEC, the Department of Business Development, the Ministry of Commerce and the Office of the Council of State, closely work together to endorse the amendment of Public Limited Company Act B.E. 2535 (1992) to be in accordance with the Emergency Decree on E-Meeting and to provide the better clarity on the related provisions for the public limited companies. ​


Extent of Ownership and Control Index

The SEC has issued the Notification of the Capital Market Supervisory Board No. TorChor. 15/2563  Re: Application for and Approval of Offer for Sale of Newly Issued Shares (No.8) dated February 28,2020, requiring companies offering for sale of shares to the public to separate the roles and responsibilities of the chairman and the CEO. The Stock Exchange of Thailand (“SET") has also announced the SET Regulation Re: Listing of Ordinary Shares or Preferred Shares as Listed Securities (No.6) B.E. 2020 dated August 3, 2020 requiring the listed companies to separate the roles and responsibilities of the chairman and the CEO, or equivalent position, according to the aforesaid Notification. In addition, the SEC issued a circular letter to all financial advisors and listed companies seeking their cooperation on encouraging IPO companies and listed company to comprehensively apply the CG code on the separation of the role of chairman and CEO in order to ensure an appropriate balance of power between the board of directors and the management.

UPDATE: The SEC has issued the Notification of the Capital Market Supervisory Board
No. TorChor. 35/2564 Re: Application for and Approval of Offer for Sale of Newly Issued Shares (No.10) dated May 1, 2021 providing more flexibility to the requirement of the separation the role and responsibilities of chairman and CEO of listed companies making secondary offering for sale of shares to the public (SPO), in accordance with the transitory provision regarding the maintaining of the status of listed companies with respect to chairman and CEO, or equivalent position, of the SET Regulation Re: Listing of Ordinary Shares or Preferred Shares as Listed Securities (No.6) B.E. 2020 dated August 3, 2020.  

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Extent of corporate transparency index

The Securities and Exchange Act B.E. 2535 (1992) allows listed company shareholders who collectively hold shares at least 5 percent of the total voting rights to propose that the board of directors include a matter in the agenda of the shareholder meeting. The board of directors must do so within a specified period of time for the upcoming shareholder meeting; however, the board may refuse to include the matter proposed by the shareholders in the agenda only if the proposed matter does not fall within the scope specified by law. In addition, the Act prescribes further protection of shareholders' rights by requiring the board to notify the refusal to include the proposed matter and the reason thereof as in such shareholder meetings for acknowledgement. In any case, if the shareholder meetings resolve by a majority vote to accept such proposed matter, the board must include the matter in the agenda of the next shareholder meeting. This is to ensure that the shareholders are entitled to make the final decision.

Summary

The overall results of the Doing Business Survey 2020 for Thailand on the topic of Protecting Minority Investors have shown a progress from the previous year. This is because, apart from the existing strict provisions on minority investors protection, more efforts are given to legal amendment to further protect investors and support the use of electronic systems in the communication among the company, shareholders and the Ministry of Commerce. This is to facilitate shareholders in getting the company's information faster and consequently having more time to carefully consider such information before making decisions that truly meet their demands. Moreover, the proposal for the use of an e-delivery and e-proxy system would make it easier for shareholders to exercise their voting rights.


Statistics of Cases under the Securities and Exchange Act B.E. 2535 (1992) and the Public Limited Company Act B.E. 2535 (1992)





Regulatory updates


For More Information

Legal Department 1 

+66 2263 6386​​