Directors’ Duties in Thailand

>> Liabilities and Penalties in Thailand

As a director, you must exercise your responsibilities carefully as the penalties for failure to do so can be severe.

There are several provisions under the Act on Offences Concerning Registered Partnerships, Limited Partnerships, Limited Companies, Associations and Foundations 1956 (as amended), which set out the penalties imposed on the directors who fail to perform their duties under the CCC with a maximum fine of THB 50,000.

The failure to file tax returns and remit tax within the prescribed due date shall be subject to a penalty (up to 200% of the tax due) and a fine, plus surcharge/interest on the amount of the taxes owed.

General Liabilities

Relations between the directors, the company and third parties are governed by the Thai law, relating to “Agency” under the CCC. Directors shall be personally liable to third parties, the company and its shareholder, for any damages caused if they carry out such acts without authority, beyond the scope of their given authority, and the company does not ratify such act.  Further, the company or any of its shareholders (if the company refuses to act) may claim against directors for compensation for any loss caused by the directors.

Directors may be relieved of liability to the company for any acts ratified or approved by a general meeting of shareholders.

It should be noted that if directors act with authority but their acts are improper (i.e. his conduct falls below the standard of a careful businessman/woman), the company will be liable to third parties and may claim indemnity against the directors.  It should also be noted that directors, even acting within the scope of their proper authority, may be criminally liable, personally or jointly with the company, for their wrongful acts or omissions committed intentionally or negligently.  For example;

  • a failure to file a balance sheet or maintain the statutory books or any false statement contained in official documents that directors signed on behalf of the company
  • any bounced cheque signed by directors

There are specific laws which impose criminal liability on directors if the company breaches these laws, even without any criminal intent of directors, such as the Revenue Code, Act on Offences Concerning Registered Partnerships,

Limited Partnerships, Limited Companies, Associations and Foundations 1956 and its amendments.

Either the breach of duty itself, or the imposition of one of the sanctions described above, may lead to disciplinary action being taken against you and/ or limitations upon you being able to continue in your role.

Indemnity

Pursuant to the CCC, directors may be relieved of their liability to the company for any acts ratified or approved by a general meeting of shareholders.  When the acts of directors have been approved by a general meeting, such directors are no longer liable for the said acts to the shareholders who have approved them, or to the company.  Shareholders who did not approve of such acts cannot claim later than six (6) months after the date of the general meeting in which such acts were approved.

There are no specific provisions that would prohibit an agreement or arrangement entered into by the company and directors which limit the liability of directors.  However, such an agreement or arrangement cannot be enforced against a third party.

Delegation of Authorities

Typically, directors may delegate any of their authorities to managers or to committees consisting of members of their body.  In the exercise of the delegated authority, the delegate must conform to any order or regulations that may be imposed on them by the directors.

However, there are filing requirements relating to the company registration that generally cannot be delegated, and a director’s proxy for attending and voting at the board meeting is not permitted.

Directors and Officers Insurance

There are no specific provisions that would prohibit directors from taking out insurance against their personal liability.  Furthermore,  Thai subsidiaries may take out insurance against the liability of their directors for a breach of duty in relation to the company.


Latest version updated 10th April 2018

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