Chartered directors to make their market debut

Around the end of March, a group of chartered directors - persons whose sole job is to work as independent directors in listed companies - will be introduced into the market. Firms on the Stock Exchange of Thailand (SET) will then be able to invite them to serve on their boards.

The chartered directors will be the first of their kind in Thailand, introduced in a move to boost good corporate governance.

It is hoped that with these independent directors, the checks-and-balances systems of listed companies will be implemented more effectively.

An attempt to create chartered directors has been long pushed by the Institute of Directors (IOD). Since September 2005, a special committee has been in place to study the qualifications and criteria for such directors.

The idea has been endorsed by the SET and IOD members through discussions at a directors' forum in February 2006, as well as the annual meeting of SET members last year.

The definition of an IOD chartered director is a director of a company or any organisation who currently serves exclusively as a director. This person is dedicated to developing the knowledge and skills in performing the duties of a director, especially in corporate governance.

The person must be sufficiently broad-based, capable of maintaining strong independence and upholding good standards of integrity and business ethics in performing the duties of a director in line with international best practices recognised by the IOD.

"By the end of this year, we expect at least 20-50 chartered directors to be introduced into the market. That would be a satisfactory result for us as we would like to focus on quality in the first stage rather than quantity," IOD president Charnchai Charuvastr said recently.

The IOD has been open for applications since December 8. There are 30 applicants on its list, most of them aged 40 to 70.

Eligible applicants are examined by the IOD as to qualifications and experience. They are then interviewed by the review and interview panels. Finally, chartered-director status is granted by the IOD panel.

Charnchai said that despite the tough criteria, it was not hard to find a supply of chartered directors. Demand is more difficult.

"Listed companies seem to be reluctant about this issue as we're still a developing market. Sometimes, we have found that the audit committee structure has been created as only a checklist, and not in a real spirit of independence. Some major shareholders of Thai companies are not comfortable with this, as they are afraid of losing control," he said.

To Charnchai, the introduction of chartered directors over the next year will be a good test of whether Thai companies are serious about the roles and tasks of their boards, as well as the issue of transparency.

However, he believes companies with an already good image of corporate governance will be the first to express interest.

Guidelines set the monthly compensation for chartered directors at between Bt50,000 and Bt100,000. This is not too high to make chartered directors easily swayed by the financial package offered by a listed company and so compromise their checks-and-balances role. It is suggested a chartered director not be on the boards of more than five listed companies at a time.

Jiwamol Kanoksilp

Thailand News
The Nation Thailand
Friday January 26, 2007