SEC and SET work to stress importance of good corporate governance

SEC secretary-general Rapee Sucharitakul said that since 65-70 per cent of Thai listed companies are family-owned and most of their directors are family members versus three independent directors (the minimum requirement), it was difficult to instil the importance of corporate governance without greater awareness among major shareholders.

“We need real access and we need to identify who are the real powers and who has the real control [over these companies] to get through to the management level. Once that is identified, then we have to think of a strategy to explain to them [the importance of corporate governance] without talking about regulations, because that is not the right approach.” 

Rapee was speaking at a “Thailand CG Forum” jointly held by the SET, the SEC and the Thai Institute of Directors (IOD) yesterday. He said the SEC and the bourse tried to convey examples where good corporate governance could actually increase long-term profits and sustainability. But this takes time, and can even lower profit in the short term if there is distrust between family and independent company directors, especially newcomers.

“So it really is boiling down to short-term versus long-term views, and a lot 

 of it depends on the trust and the interplay between the real owners and the independent directors,” he said.

Rapee said that if independent directors could act as real professionals and provide real insights on how to drive a company forward, trust could be created. It is a two-way scenario, where it takes time for the independent directors to know the ins and outs of the company while it takes time for the owners to see results. 

SET president Kesara Manchusree said the regulations regarding the minimum numbers of independent directors did not have to be changed, since it was about creating awareness. She urged the IOD to create more professional independent directors to meet growing demand. 

The bourse has launched a “Thailand Sustainability Investment” list to increase public and investors’ awareness of the importance of environmental, social and corporate governance (ESG), she said. 

The THSI is the SET’s version of the Dow Jones Sustainability Indices (DJSI) without the minimum market capitalisation requirement. 

The THSI roster comprises 38 listed companies within the SET and the Market for Alternative Investment and the 13 Thai companies that are currently listed on the DJSI. 

The list was created so that the public can see the companies’ excellence in corporate governance and their efforts in improving the conditions of the environment and society, Kesara explained.

Fianna Jurdant, senior policy analyst of corporate affairs division at the Organisation for Economic Cooperation and Development, said “growth companies” required long-term capital for investment, so it is essential for them to practise good corporate governance to secure a stable line of access to capital. 

“In order to get access to public equity markets, they [growth companies] need to meet investor expectations with respect to corporate governance practices,” she said.