Director's responsibilities : a study of Thai corporate governance and ethics

Abstract

Corporate governance of Thailand has been developed and reformed, particularly after 1997 Asian financial crisis. However, problems regarding director’s responsibilities are still entrenched in company law and corporate practices. The challenges of Thai corporate governance on director’s responsibilities are found in the areas of director’s accountability and minority shareholders protection. Legal provisions on director’s fiduciary duties and director’s duty of care and skill are unable to regulate director’s misbehaviors. Directors are not fully aware of their proper responsibilities to the company. They tend to act for their own interest or interest of their group, the controlling shareholders. In addition, legal enforcement on director’s responsibilities is not effective in practice. Shareholders litigation or other actions against directors who are in breach of their duties is rare, though there is derivative action provided as remedy for minority shareholders. In finding solutions for those problems, all relevant aspects should be brought into consideration. Corporate governance on director’s responsibilities is related to law, business and ethics. Director’s responsibilities are matters concerning human conducts, actions, behaviors as well as practices. They are related to ethics of each company director and ethics of the board members as a whole. In addition to legal and business aspects, ethical aspect should also be considered in the reform of corporate governance on director’s responsibilities of Thailand. This thesis is the study of Thai corporate governance on director’s responsibilities and ethics in order to find appropriate ethical theory where good corporate governance principles will be built on. Among relevant ethical theories i.e. utilitarianism, Kantian ethics, virtue ethics and contractualism, virtue ethics of Aristotle is the most appropriate ethical theory to be applied to corporate governance on director’s responsibilities of Thailand. It is suitable for the nature of corporate governance on director’s responsibilities, the conditions underlying its problems, and the understanding and practices of people in Thai society. Virtues and means of virtue ethics should be applied as complements to fiduciary principles for enhancing director’s accountability. The doctrine of mean of virtue ethics should be applied as complement to derivative action for enforceability and effectiveness of minority shareholders protection. In this regard, some related regulations and codes of best practices will be prescribed by adopting appropriate virtues or means, and the relevant regulators i.e. the Securities and Exchange Commission (the SEC) and the Stock Exchange of Thailand (the SET) will be given authority to interpret and apply such regulations and codes of best practices on a case by case basis.