SEC to have policy target, bigger stick
Amendment to raise punishment power
The Securities and Exchange Commission’s (SEC) policy target as well as punishment for its board of directors and secretary-general for wrongdoing will be included in the amended draft bill of the Securities and Exchange Act.
The move is to enhance the stock regulator’s accountability and follows a Finance Ministry request.
The policy target and penalties are to follow the same methods as in the Bank of Thailand Act, said SEC secretary-general Rapee Sucharitakul.
“Inflation targeting is the Bank of Thailand’s policy target. The SEC may set goals related to the capital market such as corporate governance or capital market development plans. We’ve talked with the Finance Minister and committed to arrange a three-year target that can be reviewed periodically,” he said.
The amended bill is also expected to empower the SEC to sack listed companies’ board of directors who fail to comply with their fiduciary duties or cause damage. Mr Rapee said the regulator will be able to step in only if such companies hit a stalemate that is causing damage and shareholders have tried in vain to solve the problem.
After a board of directors is ousted, the SEC will ask the court to call a shareholder meeting to let them install new board members, he said.
“The SEC has a mandate to supervise financial institutions in the capital market, but shareholders of listed companies have the real power under the Public Companies Act and they can sack directors. However, the number of minor shareholders in Thailand is enormous,” said Mr Rapee.
Several listed companies face conflicts among major shareholders over control of board seats and management. The fights have disrupted some business operations and debt payments.
Inter Far East Energy Corporation Plc, a SET-listed renewable power company, is one example. Conflicts among major shareholders have resulted in defaulted bills of exchange (B/Es) worth around 2 billion baht, with another 1.2 billion in B/Es due soon also at risk of default.
The new structure of the Stock Exchange of Thailand’s board of governors will increase the SEC’s quota for board seats to six from five and reduce those nominated by stockbrokers to four from five. The amendment will also establish a Capital Market Development Fund and consider investment management companies’ independent directors taking charge to protect unitholders’ interests, he said.
The SEC will specify in the amendment that investment management companies should have board members responsible for protecting unitholders’ interests, but it will not set a quota, said Mr Rapee.
“In overseas firms, such independent directors may account for one-third or a half as CG is an important issue,” he said.
In related news, Finance Minister Apisak Tantivorawong said the ministry is taking charge of reforming five issues — infrastructure, payment systems, the industrial sector, taxation, and fiscal security and discipline — to move the country’s towards Thailand 4.0.