SEC Secretary-General Rapee Sucharitkul revealed that “the financial reports are crucial for investors’ investment decision-making. The independence of auditors, which plays an important role in auditing and reviewing the financial statements, is therefore a key factor in making the financial statements reliable; and when the international standards change, SEC is required to revise the rules accordingly. The revised rules on the rotation of auditors specify that the auditors of a listed company must be rotated off after 7 cumulative years of service and must serve a cooling-off period for 5 consecutive years, while the existing rotation period was 5 years and the existing cooling-off period was 2 years. The revision will be effective from 1 January 2019”.

To mitigate impacts at the initial phase of the enforcement of the revised rules (2019-2023), SEC will give a grace period, during which the cooling-off period of the outgoing auditors may be less than 5 consecutive years but shall not be less than 3 consecutive years; and SEC allows the auditors in a small audit firm to perform duties for more than 7 cumulative years but no more than 9 cumulative years. As the grace period is applicable to the auditors, it is deemed to be applicable to the listed companies as well.

In addition, SEC has issued the practical guidelines for use by the audit committee in consideration of auditor rotation, aiming to enable the audit committee to appoint an independent individual to be its auditor and promote the auditors to truly maintain their independence.