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Why do we need corporate
governance?
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| Corporate governance is
not required by law, but it is a good concept that a company
should follow. |
| During the economic crisis
of 1997 the Thai economy slumped into a recession. Many corporations |
| went bankrupt ; while
several financial institutions were closed. These results led
many shareholders, |
| investors or related supervising
agencies to figure out the reason behind the recession and the |
| financial insecurity and
instability . |
| People wanted to know
who was responsible.Not only was the economic crisis triggered
by the |
| carelessness or mistakes
of the management , but also from a lack of good corporate governance |
| in the management team
and independent directors. Hence, the related parties should
realize |
| the necessity of improving
standards of management. |
| The concept of good corporate governance
is needed for business survival, boosting investors' |
| confidence and most importantly, enhancing
a company's competitive advantages. |
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What are the priniciples
behind corporate governance?
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| Corporate governance is
based upon the following standards : |
| - Accountability means
responsibility for decisions or actions that have already talun.
For |
| instance, the board
of directors is accountable towards shareholders, while the
management team is |
| responsibility
towards board of directors and shareholders. |
| - Responsibility
means an obligation to carry out assigned duties efficiently
and using their full capability. |
| - Equitable Treatment
can be described as fairness and justice. This means that stakeholders
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| should be treated equally
without any bias. |
| - Transparency
means any operation must be processed with proper evidence,
it must be |
| auditable, and information
must be disclosed to stakeholders. |
| - Vision
means broad view for creating added value to the company on
a long-term basis without |
| affecting
its short-term benefits. Any value-added transactions should
increase the company's |
| efficiency to enhance
its competitiveness. |
| - Ethics
means a code of conducts and business ethics promoting good
corporate governance. |
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What is the role of government
in corporate governance?
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| The Thai government proclaimed
2002 as a "Year of Good Corporate Governance" , marking
the start |
| of promoting good corporate
governance. Also, the governement decided to put good |
| corporate governance on
the National Agenda and formally appointed a national committee
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| on corporate governance in
February 2002, The national committee consists of the prime
minister, a |
| chairman, and other honored
committee members appointed from both public and private sectors.
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| This committee acts as
a center for continually promoting the raising Thai corporate
governance |
| standards.
Moreover, there are six sub-committees to establish action plans
and activities that will |
| promote good
corporate governance according to different perspectives, including
law enforcement, |
| improvements in accounting
standards, establishment of guidelines for listed companies,
raising |
| standards of corporate
governance in commercial banks,finance companies ,insurance
companies, |
| and securities companies
, as well as providing a proper training and public relations
about corporate |
|
| governance in Thailand. |
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Which type of corporations
specifically need corporate governance?
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| Listed companies on the
SET are the first target group that should |
| implement good corporate
governance, as they are partly financed by public investors.
Listed |
| companies with good corporate
governance attract more poeple to invest in the SET. The government
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| also applies good corporate
governance to state enterprises and , later, will aim at government
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| companies as well. agencies.
Nonetheless, good corporate governance can also be applied to
and |
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| benefit private companies
as well. |
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How do the Office of
the Securities and Exchange Commission (SEC) and the Stock Exchange
of Thailand (SET) fulfill their responsibities in promoting
corporate governance?
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| Corporate governance is
considered a company policy . |
| The SEC and SET are agencies
that motivate |
| and support its implementation corporations. |
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What are the 15 principles
of corporate governance set by SET?
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| They are a set of policies about
good corporate governance that cover the following areas : |
| - Rights, and Equitable
Treatment of shareholders and Various Groups of Stakeholders |
| - Board Structure, Roles,
Responsibilities, Accountability and Independence |
| - Disclosure and Transparency |
| - Internal Control and
Risk Management |
| - Business Ethics |
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Do the listed companies
need to follow the 15 priniciples and to do the same as those
done by other listed companies with good corporate governance?
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| Not necessarily. The 15
principles are only a set of guidelines that a company should
follow. |
| Moreover, each company
has a unique business operation and operates in a different
environment , |
| so it should implement
the principles according tothe situtation. However, in case
that the company is |
| faced with limitationsthat
prevent it from applying any particular principle, it should
disclose those |
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| reasons to the related
parties. |
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Are stakeholders important
to corporate governance? How?
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| There are many parties
leading to the success of a company; employees, creditors, debters,
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| competitors, community
and society.Certainly, good corporate governance also covers
those |
| stakeholders. Fair treatment
to stakeholders is a key to the company's success. |
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What
benefits will listed companies gain from a corporate governance
rating? It is worthwhile for companies to apply corporate governance,
especially companies with low scores, as investors will have
a negative attitude towards the company?
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| Companies with a ranking
score less than seven do not need to disclose their ranking
results and |
| declare that they are
participating in the corporate governance rating project" |
| Participating in this
project will assist a company in pinpointing its weaknesses
and help |
| improving its own corporate
governance. |
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