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Due to rapid change and high volatility in global economy together with the complicated and harsh business competition, business operations, specifically in financial business, need to be continuously adjusted and developed. The main component to raise the standard of business operation in financial sector is to have good corporate governance in place. In other words, financial institutions need to establish sound management structure and controlling system, which ensure efficiency, transparency and accountability. In fact, "Corporate Governance" is significant for Thai financial institution to compete effectively and create value-added and stability for our overall economy to grow in a sustainable way.

Government put much emphasis on promoting the organization to follow the good corporate governance and encouraging every party to take participation in raising the standard of corporate governance in order to boost the confidence of local and foreign investors and other stakeholders. On February 5, 2002 government appointed the "National Corporate Governance Committee" (NCGC) which further appointed 4 sub-committees. One of the subcommittees is the Sub-Committee on the Enhancement of Corporate Governance in Commercial Banks, Finance Companies, and Insurance Companies.
 
 
 
   
Members of the subcommittee
Governor, Bank of Thailand
Chairman
President of Thai Bankers' Association
Subcommittee member
Director-General of Department of Insurance
Subcommittee member
Mr. Surachai ?Sirivallop
Subcommittee member
Assistant Governor, Financial Institution Policy Group, Bank of Thailand
Subcommittee member and secretary
   
 
 
 
  - Set the principles for raising the standards of corporate governance of commercial banks, finance companies and insurance companies.
- Specify guidelines that encourage implementing corporate governance in other businesses related to commercial banks, finance companies and insurance companies, particularly customers and companies in which they invest.
   
 
 
  Realising the possibility of adverse effects that financial institutions may have on the economy and general public, the Bank of Thailand (BOT) has continued to enhance high standard of corporate governance to the financial institutions. The Financial Institutions Business Act of 2008, provides the BOT authority to define the appropriate structure of the board of directors and sub-committees of the financial institutions to establish checks and balances. Further, the appointment of directors and senior managements of financial institutions must receive prior approval from the BOT.

According to the BOT regulations, to obtain BOT's prior approval, the directors and senior managements must possess suitable qualifications and capabilities (Fit and Proper) by not having prohibited characteristics according to sections 24(1) - (9) of the Financial Institutions Businesses Act B.E.2551 plus any prohibited characteristics categorised three aspects including (1) honesty, integrity and reputation (2) competence, capability, and experiences (3) financial soundness.

Additionally, apart from the general duties and responsibilities, to enhance the stability of financial institution system in the long run, the board of directors must have main duties in four major areas including (1) risk management, (2) monitoring the capital adequacy, (3) rules and regulations compliance and (4) duties in accordance with good corporate governance. In particular, board of directors must perform those four major duties with honesty, loyalty and care under framework and methods of Business Judgment Rule.

The BOT regulations mentioned above are included in the notifications as followings:
  • Regulations on Corporate governance in Financial Institutions
  • Regulations for Approving the Appointment of Directors, Managers, Persons with Management Authorities or Advisors of Financial Institutions
  • Regulations on Authorities and Duties of the Board of Directors of Financial Institutions that are most valued by the Bank of Thailand

    In addition, the BOT also issued regulations, policy statements, and guidelines to enhance high standard of corporate governance to the financial institutions.
    For examples,
    On the credit risk facet, e.g.
  • Guidelines on Conducting Transactions with Major Shareholders or Businesses with Beneficial Interest (Related Lending)
  • Regulations on Granting Credits in form of Credit Card and Employee Benefit to Directors, Executives and Persons with Managing Authority of Financial Institutions
  • Supervisory Guidelines on Large Exposure (Single Lending Limit)
  • Policy Statement on Reviewing of Credits, Loan, Liabilities and Credit-Like Transactions
  • Guideline for Calculation of Credit Risk for Commercial Banks

    On the disclosure in financial reporting facet, e.g.
  • Guidelines on Accounting of Financial Institutions
  • Regulations on Preparation and Announcement of Financial Statements of Commercial Banks and Parent Companies of Financial Holding Groups

    On the consolidated supervision facet, e.g.
  • Regulations on the Consolidated Supervision

    For the complete list of the BOT's regulations, policy statements, and guideline, please visit the BOT's website: http://www.bot.or.th

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      The Office of Insurance Commission has (OIC)issued notifications, guidelines, and best pracitces to promote corporate governance practices in the insurance sector. For example:
       
     
  		• Regulations on rules and procedures to formulate policy on internal control system and investments of the insurance companies.
  		• Regulations on criteria on approving external auditors of insurance companies.
     
  		• Regulations on scope of external audit on assessing internal control and investments of insurance companies.
     
  		• Insurance companies's director handbook
     
  		• Internal Audit Guidelines
      For the complete list of the OIC's regulations, best practices, and guideline, please visit http://www.oic.or.th/th/gov/index2.php (only in Thai) Furthermore, the General Insurance Association has issued the Code of Best Practices for the insurance sector.
       

     
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