The Director’s Duty: A Guide to Roles and Responsibilities in a Thai Limited Company

According to Thai law, every Thai organization must be managed by at least one director or more. The managerial powers of the director or directors are under the control of the shareholders’ general meeting and the regulations of the company.

In accordance with the Civil and Commercial Code (CCC) of Thailand, the director of a Thai company should fulfill the following tasks:

• Making Decisions: The Thai Limited Company director makes decisions on topics in need of resolution by the board of directors’ discretion through their vote results during board meetings.

• Administrative Implementation: The director is responsible for guiding and instructing the company in establishing strategies, setting policies and goals, and basically managing its administrative performance.

Directors take on supervisory roles and assignments, such that they can also be considered executives of the company appointed in accordance with the laws and regulations of Thailand.

Directors have the power to control company administration with legal rights in limited or full capacity, as specified in the Company documentation, such as the organization’s memorandum of association, the votes of the shareholders in their meetings, and articles of association, while in compliance with the Thai laws and regulations.

Defining the Role of the Thai Limited Company Director

As far as legalities are concerned, Thai and foreign directors are treated the same in Thai companies in general and Thai Limited Companies in particular. The director role also covers the following responsibilities.

• Evaluation, monitoring, and oversight of the company.
• Establishment of company strategies, policies, and goals.
• Resolving issues per legal requirement or by management proposal
• Making decisions based on votes of the shareholders at board meetings.

Directors should work within the limits of their power to ensure every act is legally supported by the business they’re supervising, which ensures they won’t face personal liabilities from any third-party grievance.

In regard to who could be director candidates, they should have the following qualifications.

• The director must be 20 years of age or older.
• He could be a foreigner (non-resident) or citizen (resident).
• He mustn’t be bankrupt or incompetent.

The Binding Signatory Power of the Thai Limited Company Director

This power gives them the ability to sign on behalf of their represented business. It means only those who have registration with the Ministry of Commerce are considered to be binding signatories.

To ensure the validity of the signature, is legally binding therefore it is required to be checked by third-party organizations when entering a contract, applying for licenses, accepting applications or registrations from the Company with a signature.

The power of attorney, meanwhile, allows directors to delegate their signatory power to act on behalf of the company besides them, within the stated scope as per the appointment.

What are the Specific Duties of the Thai Limited Company Director?

Directors are the representatives of the organization and are responsible for acting with due diligence and carefulness in decision-making and all other actions taken on behalf of the company.

Thailand, like many other countries, impose “fiduciary duties” for directors to follow when managing their Thai Limited Company. It involves the following responsibilities:

• Duty of Loyalty: Conflicts of interest must be avoided by the director unless they’re allowed to have them as an exception. It’s now allowed to have competition with the business unless this rule is ignored with consent.

• Duty of Care: As a cautious, meticulous, and vigilant businessperson, the director should apply diligence and carefulness in every decision they make.

• Duty of Obedience: The director must be obedient or beholden to the resolutions of the board of directors, the votes of the company shareholders, the objectives of the company, the articles of association, and Thai business laws.

The Civil and Commercial Code (CCC) also compels directors to follow several statutory orders, which includes the following:

• They should check that the shareholders actually make their payment of shares for the company.

• They should get the company balance sheet ready for submission and endorsement by the shareholder general meeting.

• They should ensure that the company’s accounts and books are prepared and kept properly, ensuring their accuracy.

Thai Limited Company Director Appointment, Removal, and Resignation

Directors are appointed and removed by vote of the shareholders during the shareholders’ general meeting. A director also has the right to tender his resignation at his discretion.

• Appointment: Shareholders attend their general meetings and get tasked with choosing or appoint a director. A director is appointed to a given organization only with the majority vote from the company’s shareholders.

• Resignation: The Thai Limited Company Law’s Section 1153 states that directors wishing to tender their resignation can do so by submitting a resignation letter to the organization. The director is considered as resigned effective from the date the letter reaches the organization.

  Further notification that they’ve resigned can be provided to the registrar for good measure. The letter must contain a statement declaring the end of the director’s role and his signature.

• Removal: Complications might occur if the director refuses to sign the resignation letter after he’s removed from his office.

  To remove a director, the shareholders should pass a resolution of removal during their general meeting. The resolution should allow the director’s removal in case he refuses to resign.

• Notification of Change: Before voting for a new director after the previous one was removed or has resigned, the organization should send the registration noting a change in directors to the Ministry of Commerce within 2 weeks of the event.

Thai Limited Company Directors and Their Civil Liabilities

As discussed above, as long as directors work within the limits of their authority and don’t breach the fiduciary duties laid out above, they’re pretty much not personally or generally liable to any third-party grievances and objections.

If there’s a civil lawsuit, the burden of proof of who’s liable (or if the director overstepped the boundaries of his scope of authority) belongs to the initiator of the lawsuit.

Meanwhile, by the power of the CCC, the directors are held liable by the empowered business, the shareholders, and all the creditors to pay compensation for any company damages accrued due to fiduciary duty violations.

Liability avoidance by directors is also possible by seeking a post-action agreement or prior endorsement from the shareholders’ general meeting.

Protection from liability cannot be gained from a director’s resignation. This is because they’re still accountable for any fiduciary duty violations two years after they’ve resigned.

Moreover, liability insurance for directors and officers has been gaining popularity as a means of protection as of late.

Thai Limited Company Directors and Their Criminal Liabilities

Managers and directors can become liable for crimes when they commit omissions or acts that are outlined by rules and regulations as criminal or wrongful, meaning they’re subject to criminal punishment.

Crimes are described as generally intentional or fraudulent. However, some cases also see liability due to unintentional or negligent acts, thus requiring retribution.

Infringement in fiduciary duty doesn’t result in criminal liability unless the business is authorized or listed to issue public securities.

Personal liability of directors can occur for breaches committed by the organization they’re representing if it can be proven that they were done by the expression actions or orders of the directors.

This breach also applies to the directors’ omission to take any action or failure to make an order that is under their duty under a specific rule or regulation.

Not following basic company responsibilities, such as submitting audited financial documents on time, is considered a criminal act as well, thus necessitating penalties under the Act on Offenses Concerning Registered Partnerships, Limited Partnerships, Limited Companies, Associations, and Foundations B.E. 2499 (1956).

FAQ about Thai Limited Company Directors

Here are the most frequently asked questions about directors of Thai Limited Companies.

1. Can a Thai Limited Company, its directors and personnels be legally charged?

   Like a natural person (individual), a juristic person (company) may also face legal proceedings as an entity, represented by its directors, for any misconduct under the company’s name.

   On the other hand, a Company can also file a legal suit against other parties, individual or organization, for damages caused to Company by their actions.

   In certain situations, corporations may pick the indemnification of the director for costs and liabilities that should appear in the course of their dischargement from their directorial role.

   Directors as well as non-director managers can be held liable by various Thailand laws for committing criminal acts breaching customs law, tax, company law, and other laws. They’re held liable whether they commit a wrongful act or omissions that are proposed by the laws of the land as crimes.

   In Thailand, there’s no such concept as a plea bargain. Therefore, foreign defendants should watch out because they can’t decline contesting the crimes they’re being sued for in exchange for a sentence approved by all parties concerned or lighter charges to ensure conviction.

2. Who Can Prosecute a Thai Limited Company Director?

   Relevant Thai authorities might be assigned to the case depending on what the offense is, such as:
   a. The police
   b. Revenue Department
   c. Department of Special Investigation
   d. Office of the Consumer Protection Board
   e. Office of the Securities and Exchange Commission

   Afterwards, the Office of the Attorney General should have several of their public prosecutors under their umbrella take up the case. The trial may begin, care of the aggrieved party.

   As far as Thailand is concerned, it’s not rare for the injured individuals or companies seeking compensation and justice to start both criminal and civil trials against the business in question and its director at the same time.

   This naturally results in different courts dealing with simultaneous sets of trials. It’s also possible to do a wrongful prosecution counterclaim in kind.

3. Can the Director Be Questioned and His Home Searched?

   It’s a possibility. Authorities of the Thailand government have broad powers when it comes to investigations and information gathering as long as they have warrants. They can:
   a. Issue written orders.
   b. Do some authorized information gathering.
   c. Request for files, documents, and paperwork.
   d. Summon witnesses for the sake of getting statements.

   To reiterate, law enforcement has the authority to demand a worker of your organization to produce files under the auspices of the investigation then raid the home and offices of the director to seize documents when given a warrant.

   Officials can also submit anyone in the company—workers, officers, managers, or directors as well as any person responsible that’s affiliated with the company—to questioning regarding the supposed crime or civil grievance.

   In turn, the person being questioned has the right to not make statements that are self-incriminating.

   It’s only prudent to get legal advice or demand you’ll only talk with your lawyer present post-haste upon the arrival of the investigators or authorities at the premises of the company or the person’s home or after receiving a request for questioning or document retrieval.

The Importance of Thailand Legal Counsel

As your Thailand legal counsel, we’ll use our legal services to guide you when dealing with the specifics, documentation, and procedures required when setting up your own Thai Limited Business as well as how to run it legally.

If you’re an expatriate or foreigner requiring legal services when making investments or business deals under Thailand jurisdiction, you should get in touch with our legal team at Umpire Legal to get expert consultation every time.

We make dealing with Thailand business law as easy and safe as possible for our investor and non-citizen clientele.

Send us a message as soon as possible to get speedy advice and assistance with your Thailand business registration needs and other legal concerns.