Thailand Makes Significant Improvements in Corporate Governance Practices

A World Bank report analysing Thailand’s corporate governance framework finds that while Thailand has undertaken significant reforms that have enhanced corporate governance, key challenges remain.


The Report on the Observance of Standards and Codes confirms  Thailand as a regional leader in corporate governance with a relatively comprehensive framework and has achieved high levels of compliance in a number of key areas.


“Thailand is a clear leader in corporate governance among Asian economies and emerging economies. To maintain that leadership, Thailand must ensure the effectiveness of the Thai Securities and Exchange Commission (SEC) and Bank of Thailand (BOT) and address raising the level of corporate governance for state owned enterprises,” says David Robinett, Senior Private Sector Development Specialist, World Bank.


The report notes that corporate governance reforms implemented in Thailand  have enhanced investor trust and protected investors’ rights, especially non-majority shareholders, increased board professionalism and promoted  high levels of corporate transparency.


However the framework could be further improved with the adoption of the following key recommendations:


  • Improving State Owned Enterprises (SOE) governance and making the state a more effective owner
  • Protecting the independence and effectiveness of the Thai Securities and Exchange Commission (SEC) and Bank of Thailand (BOT)
  • Making rules and regulations clearer for market participants
  • Improving shareholder redress, including through SEC enforcement
  • Finalising convergence to International Financial Reporting Standards (IFRSs) and enhancing beneficial ownership disclosure and other non-financial disclosure
  • Strengthening auditor independence and effectiveness of market intermediaries
  • Continuing to increase board independence and effectiveness


The ROSC finds that Thailand obtained a score of 82.83 points from a possible total of 100, receiving the highest score in the disclosure and transparency areas.


The World Bank found that information disclosures in the annual reports of listed companies are primarily in line with international standards.


There are also a variety of channels for distributing listed companies’ information to investors in an appropriate and timely manner. 


In addition to legal and regulatory reforms to facilitate corporate governance improvement, the Thai capital market also show other key areas of improvement, such as, determination of basic shareholder rights and board duties and responsibilities.


“Legal reforms, amendments to pertinent rules and regulations and strict compliance with the respective principles and guidelines has brought about recognition of corporate governance standard in the Thai capital market," says Dr. Vorapol Socatiyanurak, Secretary General of the Thai Securities and Exchange Commission..


Since Thailand first joined the CG-ROSC assessment program in 2005, it has been a big challenge for the Thai Capital Market to enhance the corporate governance standard to be in accordance with international guidelines.


"The Thai Listed Companies Association (TLCA) has constantly encouraged corporate governance development among listed companies for years, contributing to significant progress and recognition to the effort,” says Chanin Vongkusolkit, TLCA Chairman of the  Thai Listed Companies Association.


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