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Corporate Governance ROSC for Thailand David Robinett April 25, 2013

Corporate Governance ROSC for Thailand David Robinett April 25, 2013. Corporate Governance. Shareholder rights Relations with stakeholders Market transparency Functioning of the board. Why does this matter?. Sustain investor confidence Facilitate access to capital

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Corporate Governance ROSC for Thailand David Robinett April 25, 2013

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  1. Corporate Governance ROSC for Thailand David Robinett April 25, 2013

  2. Corporate Governance • Shareholder rights • Relations with stakeholders • Market transparency • Functioning of the board

  3. Why does this matter? • Sustain investor confidence • Facilitate access to capital • Build internal controls • Improve board performance • Improve company performance • Develop industry and finance

  4. The Corporate Governance ROSC • Benchmarks against OECD Principles • (Mostly) Publicly available • Includes recommendations • 81 ROSCs in 59 Countries • Brazil (06, 13*), Indonesia (10), Malaysia (05, 12), Philippines (06),Russia (13*), Thailand (05, 13), Vietnam (06, 13*),

  5. What stands out for Thailand? • Private sector buy in • The IoD… • Strong institutions • High corporate transparency • Modern laws, regulation • Civil law but with common influence

  6. What stands out for Thailand? • Prominence of SOE (issues) • Links between SEC, BoT and MoF • Range of regulatory, legal requirements • Gaps for shareholder fairness • Audit, Accounting standards still lag

  7. Investor Protection

  8. Investor Protection: Strengths • Basic rights in place • Strong rules on RPTs, changes in corporate control • Inst. Investors active in GMS, disclose voting • SEC, SET, monitor for insider trading

  9. Investor Protection: Challenges • Disclosure of control • Supports other rights • Meeting participation • Notice, alternate voting, agenda, EGM • Foreign shareholders, custodians • Board selection in practice • Redress gaps

  10. Disclosure: Strengths • Complete annual reports • Include: • Direct, some indirect, ownership • RPTs • Details on directors • Increased Auditor Oversight • Information online • Including material events • IoD Scorecard

  11. Disclosure: Challenges • Still not full IFRS • Disclosure of control • Includes shareholder agreements • Auditors non-audit work • Disclosure by other reputational agents • SOEs audited by OAG (only)

  12. Boards & Oversight: Strengths • Independent boards • Most non-executive • Meet 1/3rd requirement • Separate Chair, CEO • (Mostly) Clear Duties, responsibilities • High Professionalism • Audit, other committees • Training through IoD • Evaluations • Internal audit, control, risk management • Whistleblower protection

  13. Boards & Oversight: Challenges • Patriarchal Chairs • Boards should pick CEO • Duties not always implemented in practice • SOE boards

  14. Framework: Strengths • Clear commitment to improve • Strong legal foundation • SEC, BoT, SET: • Well resourced • Active enforcers • Voluntary, initiatives • SET, IoD, TALC, TAI • Reform for SOEs

  15. Framework: Challenges • Some redundant, regulations, guidelines • Redress issues • Small shareholders • Criminal cases • Coordination in enforcement • MoF link to SEC, BoT • SOEs lagging

  16. Main Recommendations • Improve SOE governance • make the state a more effective owner • Consider a focused review of SOE governance, • Maintain effectiveness of the SEC & BoT, • independence • improved enforcement capacity, cooperation; • Updating, clarifying SET and SEC guidelines and regulations

  17. Main Recommendations • Close shareholder right gaps • Better disclosure of control • Full adoption of international accounting standards • Strengthening auditor independence • Independent chairs and increasing board oversight of management

  18. Thank you! David Robinett drobinett@worldbank.org World Bank Washington, DC www.worldbank.org/corporategovernance

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