Capital market professionals/gatekeeper
Company secretary
Auditor
Company secretary
Qaulification
Q: Does the Securities and Exchange Act specifies the qualifications of company secretary? What educational backgrounds or expertise should the company secretary have?
A: The Securities and Exchange Act only specifies the scope of duties and responsibilities, not the qualifications, of the company secretary; the appointment of a qualified company secretary depends on the board's discretion.
Q: Are the company's personnel, e.g., director, executive, employee, secretary, board member or any other positions, eligible to hold the position of company secretary as well?
A: Yes. The Securities and Exchange Act does not prohibit such matter. The board may appoint any person who is deemed appropriate and qualified to perform the duties of company secretary. Nevertheless, the fundamental intention of the company secretary requirement is to assign a responsible person for preparing and storing the company's important documents. To appoint any person to hold such position, the company should seriously consider the knowledge, capabilities, and appropriate qualities of such person.
Q: Is it allowed to outsource the company secretary position to a third party such as an audit firm, a law firm, or any other juristic person?
A: Yes. The law does not specify any prohibition on the matter. The appointee can be either an ordinary person or a juristic person. In the latter case, the company must identify the name of the official assigned by the appointed juristic person to perform the duties of the company secretary via Form 89/15-1.
Appoinment of company secretary
Q: Can a person serve as company secretary for several companies at once?
A: Yes. A listed company may appoint either a third party or its permanent employee as the company secretary, and the appointee may hold the same position at other companies as well; however, in case of appointing an employee who simultaneously serves as another company's secretary, the company should consider whether such employee would be able to perform duties to the best of his/her ability.
Q: Can a listed company appoint more than one person as company secretary?
A: Yes, but each must be appointed by the board of directors and obligated to equal legal liabilities.
Q: Is a listed company required to notify the SEC Office of the appointment of its company secretary after having disclosed such information to the SET?
A: Pursuant to Section 89/15, chairperson of the board of directors must notify the name of the company secretary within 14 days from the appointment date.
Q: Is a subsidiary of a listed company required to notify the name of its company secretary to the SEC Office as well?
A: No. The rules on appointment of company secretary do not apply to subsidiaries of listed companies.
Q: Is it compulsory to show the position of company secretary on the organizational chart?
A: The Securities Law requires every listed company to appoint a company secretary, but showing the position on the organizational chart is voluntary.
Q: Should the company secretary work under the chain of command of the management or the board of directors? And why?
A: The determination of the chain of command is subject to the board's discretion. In any case, the organizational structure should support efficient duty performance of the company secretary. Generally, the position should be under the management's command because it serves the whole company, not just the board.
Q: Apart from the name of the company secretary, what else must be notified to the SEC Office?
A: All required information on the company secretary must be disclosed via the SEC Office Form 89/15-1 and Form 89/15-2.
Q: Must the company secretary report his or her personal information to the SEC Office via Form 56-1 in the same manner as the first four highest ranking executives next to the chief executive?
A: Yes. Like company executives, the name and personal information on the company secretary must be disclosed via Form 56-1 and Annual Report as well.
Q: Is a delayed disclosure of company secretary information and document storage location a breach of obligation?
A: Although such delay is not a criminal offence, the SEC Office may issue a written warning to the company against such improper act.
Q: While under business rehabilitation by a plan administrator, is the company required to have an active company secretary?
A: Yes. A rehabilitating company must still comply with the company secretary appointment rule under Section 89/15 because Section 89/22 prescribes that Section 89/7 to Section 89/21 shall apply, mutatis mutandis, to interim executives, planner, plan administrator and interim plan administrator under the Bankruptcy Law, as well as liquidator. Thus, the plan administrator must ensure compliance with Section 89/15. During the rehabilitation plan or not, the company secretary must prepare and keep the register of the plan administrator, notices of directors' meetings, minutes of the plan administrator's meetings, and reports on the plan administrator's interest.
Duties and responsibilities
Q: In case the company secretary is a juristic person, who is the authorized signatory on behalf of the company secretary? In case of commission of a legal offence, unintentionally or dishonestly, how would the company secretary be penalized?
A: The person(s) with the management authority shall hold responsibilities on behalf of such juristic person. In case of committing a legal offence, such juristic person is subject to legal liabilities. In this regard, the person(s) with the management authority and the person(s) assigned by the juristic person to be responsible for the matter in question may be subject to legal liabilities as well. Regarding the shareholders' meeting notice, normally the company secretary oversees the preparation, and the chairperson or the chief executive is the signatory thereof.
Q: Pursuant to Section 89/15, the company secretary shall prepare the annual report. In practice, however, the public relations department may be responsible for the job. In such case, must the job be transferred back to the company secretary? And how should the company proceed?
A: By law, the company secretary shall be responsible for the preparation of the annual report. In practice, the company secretary may compile information from across departments by oneself to prepare such report or assign others to help with the task. Either way, the responsibility still lies with the officially appointed company secretary.
Q: If the company secretary suspects any transaction to be a conflict of interest, should he or she inform the audit committee for further consideration?
A: Firstly, the company secretary should recommend that the company ensure strict compliance with the related regulations. If the company does not proceed, then the company secretary may request the audit committee to consider the matter, and if it turns out to be a related party transaction, make sure it complies with the governing rules. the company secretary may also notify the SEC Office of such information and receive whistleblower protection.
Q: If the company secretary is ordered by a director or an executive to act or not to act in any manner that may contravene the securities laws, without a chance of avoiding such order, is the company secretary liable to contravention of such laws as well? If so, what penalties apply?
A: By acting or not acting as ordered in possible contravention of the securities laws, the company secretary may be considered a co-principal or an aider to an offence under such laws.
Preparing and keeping documents
Q: If the company's documents are stored in the database of the central credit information department and accessible to the company secretary and the authorized director(s), is the company considered to have already kept the documents with the company secretary. If not, what should the company do to comply?
A: The Securities and Exchange Act B.E. 2535 does not prescribe specific procedures for keeping documents by the company secretary. The company therefore may use any effective procedure that also safely prevents unauthorized access, revision, change or destruction of such documents.
Q: Pursuant to Section 89/15 and Section 89/17, is it allowed to keep important documents in the electronic system only to save paper and storage space? Otherwise, are both the originals and copies required?
A: The company secretary may keep important documents in the electronic system; however, the company must comply with the Electronic Transactions Act by, for example, using a clear and regular work process that absolutely prevents duplication or remaking of such documents and requires regular review, 100 percent log record, as well as internal and external audit to certify that the company has operated in compliance with the specified process. Regarding the original documents, there is no regulation under the Electronic Transactions Act allowing electronic documents to be used as sole evidence in case of dispute; therefore, the company should also keep the original hardcopies until regulations concerning the matter are stipulated.
Q: In case, like the company secretary, CFO's secretary is assigned to keep the important documents such as the meeting notices of the board of directors and the shareholders, how should the company proceed?
A: In practice, the company secretary may entrust a reliable person to handle the document keeping task on his or her behalf, but the legal liabilities remain with the company secretary.
Q: Is it permissible for the chairperson to authorize a person to sign on the letter notifying the SEC of the name of the company secretary and the document storage location?
A: Yes, preferably attached with the power of attorney. In any case, the previous one issued for document filing with another official agency may be used for this purpose.
Q: How many prior years of documents must be kept at the storage location?
A: Five or since the date of listing on the Stock Exchange. In any case, the storage period of back documents is unrelated to the prescription by law or the regulations on storage of such documents. Additionally, the back document storage rule does not hold the company secretary responsible for the accuracy and completeness of all stored past documents. The company secretary's legal liabilities begin on the effective date of the Securities and Exchange Act (No. 4) B.E. 2551 (31 August 2008).
Q: What details must the register of directors contain?
A: Pursuant to Section 96 of the Public Limited Companies Act, the register of directors shall contain at least the following information:
(1) names, dates of birth, nationalities, and addresses of the directors;
(2) types, values, share certificate numbers, and the number of shares held by each director; and
(3) effective or end date of directorship.
Q: What should the company do if certain documents have never been kept?
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A: The company must comply with the associated rules since the effective date of the Securities and Exchange Act, and is advised to begin a systematic storage of the types of documents never been kept. In filling out Form 89/15-1 notifying the document storage location, the following statement may be used: “Before [YEAR], [SPECIFY THE TYPE OF DOCUMENT] had never been stored. Since then, it has been stored at [PLACE OF STORAGE]."
Q: In notifying the place of storage, what should the company do If directors and executives have never reported their interest?
A: Directors and executives are required to submit a report on their interest in compliance with the notification of the Capital Market Supervisory Board issued under Section 89/14 of the Securities and Exchange Act.
Remuneration
Q: Does the company secretary receive the attendance fee like the directors do? If so, who specifies the rate and approves the amount?
A: The Securities and Exchange Act does not specify regulations on the company secretary's remuneration; the board of directors may use their discretion on the matter.
Auditor
Q: Why is it a requirement to change auditor? (referring to a person not the office)
A: Such requirement is aim to ensure auditor's independence. As an auditor continually conducting the audit of financial statements for the company may become familiar and overlook significant issues.
Auditor's duty to expose circumstance that is deemed illegal
Q: Does whistleblower protection measures cover auditor?
A: Yes.
Q: Is the requirement for auditor to report suspicious circumstance of the management's misconducts considered as responsibilities that go beyond the scope of auditor's work, as the International Standards of Auditing (ISA 240 - The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements) has covered only the auditing of financial statements?
A: Section 89/25 expected auditor to inform the facts on suspicious circumstances discovered during auditing of financial statements, it does not expect auditor to take further inspection on the case. The Capital Market Supervisory Board may issue notification determining type of suspicious circumstances for auditor to use as guidelines in auditing company's financial statement.
Q: Does information disclosure according to the Securities and Exchange Act B.E. 2535 go against auditor's ethics as specified in the Accounting Professions Act? In case there is discrepancy between the two Acts, which one auditor should adhere to?
A: The requirement on information disclosure aims to protect auditor who has discovered suspicious circumstance acquired from normal auditing of financial statements, which is under the present accounting standards and accounting professions' ethics. The objective of such requirement is also to report such misconduct to regulatory bodies or other related government entities to suppress the spread of such circumstance or damages. Such requirement is in line with international practices, even in the code of ethics established by International Federation of Accountants stipulated that it will not be considered as unethical behavior in terms of maintaining client's confidentiality. The code specified that accounting professions shall inform suspicious circumstance that may involve illegal activities to the appropriate public authorities as specified by law. Therefore, it may not be considered that information disclosure is in opposition to auditor's code of ethics.
Q: In compliance with Section 89/25, if auditor reports facts through Auditor's Report or informs the company's management through letter, will the auditor be considered performing duty according to Section 89/25? If it is not sufficient, what are the recommendations?
A: In case auditor has reported suspicious circumstances in the Auditor's Report, it will be considered that auditor already performed duties in compliance with Section 89/25. However, in case auditor has discovered suspicious circumstance but the limitation on scope is imposed by client, as a result the auditor is unable to obtain sufficient appropriate audit evidence, auditor should report audit committee to proceed with the matter. In case audit committee is aware of the matter but does not take further actions, it will be considered that auditor has performed duties in compliance with Section 89/25.
Q: What kind of behavior that requires auditor to report to audit committee?
A: Auditor has duties to report misconducts of directors, managers or persons responsible for company's / securities' company operations on the following offences:
Section 281/2 Paragraph 2 (Director or executive of the company who fails to perform his duties with responsibility, due care and loyalty.)
Section 305 (Person who damages, destroys, conceals, any property or document which the competent officer has seized, attached, kept, or ordered to be delivered as evidence.)
Section 306 (Director or manager dishonestly deceives the public.)
Section 308 (Director or manager dishonestly converts property to himself)
Section 309 (Director, manager, or person damages, destroys juristic person's property.)
Section 310 (Director or manager acts to prevent creditor from receiving payment.)
Section 311 (Director or manager acts or omits to act in order to obtain unlawful gains.)
Section 312 ( Director or manager permits another to commit dishonest act in the account or document) and;
Section 313 (Increasing penalties for director or executive of juristic person listed on the Securities Exchange or traded in any over-the-counter center who contravenes Section 307 308 309 310.)
Q: What level of suspicion and severity of circumstance that auditor should make a report?
A: Severity level or suspicion level that auditor should make a report will be later specified by the Capital Market Supervisory Board. Auditor can perform duties within the scope of current auditing financial statements and accounting standards. There is no extra requirement concerning auditing work.
Q: In case auditor reports suspicious circumstance but Audit Committee or the SEC later found out that company's executive did not commit dishonest act as accused, will there be any action taken against the auditor, as it may ruin reputation of the alleged executive?
A: No, because it is an action that is in compliance with specified law. Auditor will be protected under whistleblower provisions as specified in Section 89/2. On the contrary, if the SEC probed into case and found that auditor was aware of illegal activities during auditing or reviewing of financial statements according to accounting standards but failed to report the SEC, auditor would be deemed committing an offence. Moreover, the SEC has obligation to maintain confidentiality of the acquired information in the same manner as other information acquired from performing its duties and is unable to disclose to the third party except that it is an exemption as specified in the law.