Bangkok--3 Oct--SET
Thai public companies are actively seeking to find the appropriate limit number of directorships that their firm’s board members should hold, The Stock Exchange of Thailand (SET)’s Corporate Governance (CG) Center disclosed. The SET has advised that each person should not be a director in more than five companies, and if any director exceeded that limit, the firm should clarify the situation and explain about that director’s performance in the companies’ annual reporting.
“Company directors play a crucial part in promoting good CG because they are key persons in corporate policy and decision-making. Hence, they should dedicate their time to their company so as to maximize the organization’s benefits. Acting as a director for several companies simultaneously may cause their performance to deteriorate,” Ms. Sopawadee Lertmanaschai, secretary, Subcommittee on Investor Education and Public Relations, Thailand’s National Corporate Governance Committee, noted.
“Listed companies have been eager to know the maximum number of directorships their board members can hold at one time, showing that the firms are aware of and willing to employ CG principles. They are also ready to report their implementation in information report form 56-1 as well as annual reports, starting from the 2007 reporting schedule,” Ms. Sopawadee said.
According to the SET’s CG Center guide on directors’ roles and responsibilities, a person should simultaneously hold directorships in no more than five companies. If he/she exceed that limit, the firm should explain why and report his/her performance in the firm’s annual reporting, so as to keep the investors informed.
Ms. Sopawadee added that each company should limit the number of directorships each board member may hold at one time, in accordance with their directors’ responsibilities, because each firm may be constrained by different business conditions and size. If the board views that a director may sit on more than five boards simultaneously without negatively affecting his/her performance, then the company should give its reasons to its shareholders and other stakeholders, as this information may be useful when they vote for the nominated directors.
The guidance provided is useful for Thai public firms. The SET’s CG Center has studied overseas CG practices and found that an appropriate number of companies for a director could be determined as follows: 1) For an executive or full-time director, four companies should be the maximum, 2) For a non-executive or professional director, six companies should be the maximum, and 3) For a chairman, one company should be the maximum.
“Presently, about 99.5% of all board members are within SET’s recommended limit of five directorships -- only 23 directors (or 0.5%) exceed this limit,” Ms. Sopawadee noted.
For more information, please contact the Corporate Communications Dept.:
Ladawan Kantawong Tel: 0-2229-2036 / Kulvida Jintakawong Tel: 0-2229-2037 /
Nattaporn Boonprapa Tel: 0-2229-2049 / Watsamon Saowakhonsathien Tel: 0-2229-2797