UNOFFICIAL TRANSLATION
Readers should be aware that only the original Thai text has legal force and that this
English translation is strictly for reference. The SEC, Thailand cannot undertake any
responsibility for its accuracy, nor be held liable for any loss or damages arising from or
related to its use.
Notification of the Securities and Exchange Commission
No. KorChor. 8/2553
Re: Determination of Untrustworthy Characteristics of
Company Directors and Executives
By virtue of Section 14, Section 89/3 and Section 89/6 of the Securities and
Exchange Act B.E. 2535 (1992) as amended by the Securities and Exchange Act (No. 4) B.E.
2551 (2008) which contains certain provisions in relation to the restriction of rights and
liberties of persons which Section 29 in conjunction with Section 33, Section 34, Section 41,
Section 43, Section 44 and Section 64 of the Constitution of the Kingdom of Thailand so
permit by virtue of law, the Securities and Exchange Commission hereby issues the following
regulations:
Clause 1
In this Notification:
(1) “company,” “subsidiary,” and “executive” shall have the same meanings
as defined in Chapter 3/1 of the Securities and Exchange Act B.E. 2535 (1992);
(2) “financial institution” means an entity which undertakes the following
businesses:
(a) Commercial bank, finance business, credit foncier business;
(b) Securities business;
(c) Derivatives business;
(d) Insurance business;
(e) Government financial institution established under specific law;
(3) “Committee” means a committee appointed by the Office to render
opinions to the Office on complying with this Notification;
(4) “untrustworthy characteristic” means any characteristic showing
inappropriateness to be entrusted with business management of a publicly held company.
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Clause 2
This Notification shall not apply to any director and executive
of a foreign company whose shares are listed on the Stock Exchange of Thailand.
Chapter 1
Untrustworthy Characteristics
______________________________
Clause 3
Any company director and executive shall not possess any
untrustworthy characteristics as follows:
(1) Having deficiency in legal competence or having been subject to any
legal proceeding under the law governing capital market as specified in Clause 4 as the first
category of untrustworthy characteristics;
(2) Having any record of deceitful, fraudulent or dishonest management of
assets as specified in Clause 5 as the second category of untrustworthy characteristics;
(3) Having engaged in any transaction, practice, or course of business which,
if considered on a reasonable ground, materially affected shareholders, company or capital
market as a whole, in a manner as specified in Clause 6 as the third category of untrustworthy
characteristics.
Clause 4
The followings shall be classified as the first category of
untrustworthy characteristics:
(1) Being an insolvent person; or
(2) Being an incompetent or a quasi-incompetent person; or
(3) Having been named in any criminal complaint filed by the Office; or
having been subject to any legal proceeding following the criminal complaint initiated by the
Office; or having been sentenced to imprisonment by the court’s final judgment and it has not
yet surpassed the three-year interval time after either the person completed the term of
imprisonment or the suspension of sentence period was over, provided that the action taken
hereto shall base upon the violation of the Securities and Exchange Act or the Derivatives
Act as specified in the list of offences shown in the Appendix.
Clause 5
The followings shall be classified as the second category of
untrustworthy characteristics:
(1) Having been named in any criminal complaint filed by a financial
regulatory authority, or subject to any legal proceeding following the criminal complaint
initiated by a financial regulatory authority, or barred from serving as director or executive of
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a financial institution by a financial regulatory agency, whereas the term “financial regulatory
authority” herein means both local and foreign one; or having been sentenced to
imprisonment by the court’s final judgment and it has not yet surpassed the three-year
interval time after either the person completed the term of imprisonment or the suspension of
sentence period was over, provided that the action taken hereto shall base upon the
commission of offences regarding deceitful, fraudulent or dishonest management of assets
which has caused damage to either the financial institution with which the person was
associated or the customers thereto; or
(2) Having been sentenced to imprisonment by the court’s final judgment and
it has not yet surpassed the three-year interval time after either the person completed the term
of imprisonment or the suspension of sentence period was over, provided that the action
taken hereto shall base upon the commission of public offences regarding deceitful,
fraudulent or dishonest management of assets; or
(3) Having been subject to the court’s order of asset seizure under the Counter
Corruption Act, the Anti-Money Laundering Act or any other similar law and it has not yet
surpassed the three-year interval time after the date on which the court issued such order.
Clause 6
The followings shall be classified as the third category of
untrustworthy characteristics, if there is reasonable ground to believe that a person:
(1) acted or omitted to act, without good faith or with gross negligence, in
executing any transaction for the company or its subsidiary, which caused damage to the
company or shareholders or generated unjust enrichment for oneself or others;
(2) disclosed or disseminated false information or statement regarding the
company or its subsidiary which may cause misunderstanding or concealing material facts
that should have been stated which may affect decision making of shareholders, investors or
other parties involved, either by ordering, taking responsibility for or involving in
preparation, disclosure or dissemination of such information or statement or by taking or
omitting to take any other action, unless the person can prove that, by virtue of own position,
status or duty, he was not aware of such untruth or omission; or
(3) engaged in any unfair practice or taking advantage of investors in trading
securities or derivatives or aided or abetted thereof.
Execution of the following transactions for the company or its subsidiary,
whether by ordering, authorizing, supporting, obtaining benefits or significantly involving in
any other manner, shall be considered as not in good faith under subparagraph (1) of the first
paragraph, unless the person can prove otherwise:
(1) Engaging in transaction which did not make in a manner as a prudent
person in the like business would enter into with general counterparty under similar
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circumstance, and did not make for the utmost benefit of the company or subsidiary, or which
was made for the advantage of oneself or others;
(2) Engaging in transaction which did not comply with the rules prescribed by
virtue of the Securities and Exchange Act concerning related transactions or significant
transactions involving the acquisition or disposition of assets.
Clause 7
The director or executive shall be considered as possessing
untrustworthy characteristic under Clause 4, Clause 5 and Clause 6 for the following periods
of time:
(1) The first category of untrustworthy characteristics shall be in effect from
the date the court has issued an order or delivered judgment on the specified matter or since
the date the Office has submitted a complaint to the criminal authority, as the case may be,
and remain so until such characteristic has ceased;
(2) The second category of untrustworthy characteristics shall be in effect
from the date the Office has notified, in writing, the person under consideration and the
company of which such person is director or executive, of his possession of such
characteristic under Clause 5, and remain so until such characteristic has ceased;
(3) The third category of untrustworthy characteristics shall be in effect from
the date indicated in the Office’s letter notifying the person under consideration and the
company of which such person is director or executive, of his possession of characteristic
under Clause 6 and remain so until the condition or the time period prescribed by the Office
has ended which shall not be more than ten years. In prescribing such time period, it shall
take into account the seriousness of behavior of the person under consideration.
Clause 8
Possession of any untrustworthy characteristic under Clause 7
shall cause such person to be removed from his directorship or executive position and such
person shall not remain in his position in the company, pursuant to Section 89/4 and the
second paragraph of Section 89/6, as the case may be.
Chapter 2
Consideration of the Third Category of Untrustworthy Characteristics
______________________________
Clause 9
In considering whether any person possesses any untrustworthy
characteristic of the third category, the Office may have discretion whether to initiate the
consideration process if any of the following fact is presented:
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(1) The matter, on its face, is not a serious one; or
(2) The matter occurred for more than ten years prior to the date on which
such facts have come to the attention of the Office.
Clause 10
In considering the seriousness of behaviors constituting the
third category of untrustworthy characteristics and the time period of possessing
untrustworthy characteristic, the Office shall take into consideration the following factors:
(1) Involvement role and behaviors of the person under consideration;
(2) Sanction already imposed on such person;
(3) Impact on or damage to the company or shareholders as a whole, or unjust
benefit related to the facts or behaviors under consideration;
(4) Any step taken thereafter for the best interest of the company,
shareholders or capital market as a whole, whether to rectify, remedy or prevention of
recurrence of similar facts or behaviors;
(5) Level of cooperation of the person under consideration with the Office or
any obstruction for justice;
(6) Any other records or behaviors in
inappropriateness to serve as company director or executive.
the
past
which
indicate
Clause 11
The Office, with the approval of the Securities and Exchange
Commission, shall appoint a Committee to perform duty in considering facts and evidence
and rendering opinions to the Office on considering whether any person possesses the third
category of untrustworthy characteristics and also on any matters related to compliance with
this Notification.
The Committee under the first paragraph shall comprise no more than five
experts who shall not be Secretary-General or staff of the Office. Among them, there shall be
at least one legal expert and one financial or accounting expert. In addition, there shall be one
business management expert appointed from qualified names nominated by the Thai Listed
Companies Association.
The Committee shall elect one member as chairman and the Office shall
appoint one of its staff as secretary.
Any Committee member having any material interest in the matter under
consideration in such a way that may affect his ability to express independent opinion shall
declare such interest and shall not participate in considering such matter.
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Clause 12
The Office shall notify any person of his possession of
untrustworthy characteristic under the third category only when at least the following actions
have been taken:
(1) Giving an opportunity for the person under consideration to explain his
facts and submit evidence;
(2) Presenting facts and explanation provided by the person under
consideration (if any) for the Committee’s consideration and, if requested by the Committee,
arranging for further explanation by the person under consideration;
(3) Obtaining the Committee’s resolution, with vote of not less than three
fourths of the total committee members attending the meeting, that the person under
consideration possesses untrustworthy characteristic and the time period during which the
possession of untrustworthy characteristic shall last;
(4) Notifying preliminary consideration result to the person under
consideration so as to give him additional opportunity to make another explanation or
argument on the subject matter within the prescribed time period.
Proceeding other than those specified in the first paragraph shall be governed
by the Administrative Procedure Act B.E. 2539 (1996).
Clause 13
This Notification shall come into force as from 16 May 2010.
Notified this 23rd day of April 2010.
- Signature (Vijit Supinit)
Chairman
Securities and Exchange Commission
___________________________________________________________________________
Remark: The rationale for issuing this Notification is to prescribe characteristics to be
determined as untrustworthy characteristics to be entrusted to director or executive position
of a company making an offer for sale of shares to the public or a listed company, as well as
methods and procedures for consideration of when and how the person has possession of such
characteristics so as to prevent an appointment of any person with untrustworthy
characteristics to the position of director or executive of any publicly held company.
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List of Offences
Offences
under Clause 4(3)
Unfair trading practices in
securities or derivatives
Dishonest undertaking or
causing damage to properties,
creditors or the public
Failing to perform duty with
responsibility, due care and
loyalty
Knowingly making false
statements or concealing
material facts which should
have been stated
Operating securities business or
derivatives business without
license in a manner to defraud
public
Securities and Exchange Act
B.E. 2535 (1992)
Section 238 to Section 243
Derivatives Act
B.E. 2546 (2003)
Section 92 to Section 100
Section 306 to Section 311,
Section 314 and Section 315
Section 145 to Section 147,
Section 149 and Section 150
Section 281/2
-
Section 281/10 and
Section 312
Section 148
Section 289 in conjunction
with Section 90
Section 125 in conjunction
with Section 16