Directors Liability.

[prestige]

Can anyone let me know if there is a website that outlines corporate legislation/requirements in Thailand?

If not what I need to know specifically is –

Are directors of a proprietary company held accountable for corporate debt if the company should fail as it is here in Australia? Or do the regulations allow for a Director to walk away from a bankrupted company with no liability?

I seem to be getting two different opinions: obviously one from the company whom we are dealing with and one from an accountant in Thailand who we have retained.

Unfortunately neither can produce copies of the legislation that is involved.

[Indo-Siam]

I cannot immediately give you the legal citation, but my understanding is as follows:

For Thai Private Co. Ltd., personal liability for claims against the company occur in two circumastances:

1. Shareholders have personal liability up to their their pro-rata share of registered capital, up until capital has been fully-paid in - after that, they have no personal liability - the most they can lose is their investment in the company.

2. A company director can be held personally liable for debts of the company that the director incurred in direct contravention of shareholder's instructions to that director.

So - the mere fact that the company went bankrupt is not sufficient grounds to hold a director personally liable. To hold a director personally liable, you would have to demonstrate in court that a specific financial obligation was proposed to the shareholders, then the shareholders made a documented decision, and then the director acted in direct contravention to that decision - and that the company incurred a specific debt as a result. If such a situation could be legally documented, then the director could be held personally liable for that specific debt.

I suspect that the citation for this exists within the Civil and Commercial Code of Thailand - for a fee, my company could find this citation.

But - unless the specific situation is clear enough to demonstrate the burden of proof I described, I think you are wasting your time. I am virtually certain that the mere action of slowly running a company into the ground through general poor management is not grounds for holding a director personally liable. Nor is the fact that director made inaccurate reports - all he has to say is that he was incompetent, and thought he was reporting correctly. Incompetence is not grounds for holding a director pecuniarily liable for losses. Only documented willful disobedience to documented shareholder instructions satisfies the legal standard for personal liability.

Good luck!

Steve Sykes

Managing Director

Indo-Siam Group

Bangkok

[email protected]

www.thaistartup.com

Skype: sykesbkk

[OldAsiaHand]

That is consistent with the legal advice I have received over the years.

Of course, that advice was primarily from Thai lawyers, so.......

[Bobcat]

I agree with Steve's analysis. For your information, the liability of directors is governed by Sections 1168, 1169 and 1170 of the Civil and Commercial Code of Thailand. Ask your Thai accountatnt to photocopy these provisions and email them to you.

[Wekhin]

prestige,

It is very simple.

Whether a director has to be responsible or not depends on his act.

The act that he did it intentionally or not.

[OldAsiaHand]

prestige,

It is very simple.

Whether a director has to be responsible or not depends on his act.

The act that he did it intentionally or not.

<{POST_SNAPBACK}>

If there were a prize for the most incomprehensible advice ever posted on this forum, surely this would be in the running.

[Wekhin]

prestige,

If there were a prize for the most incomprehensible advice ever posted on this forum, surely this would be in the running.

<{POST_SNAPBACK}>

Hi Oldhandasia,

Thanks for your comments. :-)

Since the topic owner's question is not very detailed, please do not expect one can advise to the point. Indosaim already explained some points that I need not repeat.

Thai laws have mostly been based on British, French, German, and US laws. Since the topic (prestige's question) is not specific, I can only give advice based on philosophy of the laws. If one wants detaied explanations, he should go into details.

[Maka]

Id also sugest you talk to your insurance agent. Tell them you want E &O insurace for a Director ......

You will quickly learn in hard $ terms what your risk is when they give you the premium and accompanied documents.