Poor legal comprehension and an inefficient enforcement system are two key constraints limiting the effectiveness of laws governing corporate directorship, says a recent poll by the Thai Institute of Directors (IoD).
After its March 10 seminar on the Juristic Persons Act 2017, which imposes new criminal liabilities on directors, the IoD conducted a poll among company directors.
Of the 82 respondents, some 70% said the new legislation, which will lead to similar changes to 76 other acts and pieces of legislation, is appropriate in supporting directors to perform their roles in accordance with good corporate governance principles. Another 13% think there is room to tighten the law.
"Since most respondents view the lack of legal knowledge as a key constraint, it clearly means directors need to improve their legal knowledge, especially on legal liabilities involving their directorships," said Bandid Nijathaworn, president and chief executive of the IoD.
"If they are not aware, do not understand or properly comply with the relevant laws, they could be punished for crimes they didn't intentionally commit."
Some 38% of directors see the lack of legal knowledge as a key constraint to effective law enforcement, while 36% see inefficient enforcement systems as the main limitation. Another 21% view unclear legislation as a key condition creating loopholes for wrongdoers, while 5% think the penalties are not severe enough to discourage violators.
Regarding awareness of legal liabilities for directorships, 78% believe directors at their companies understand the key legal principles, while 16% said their directors still do not understand legal liabilities.
Only 6% said directors at their firms thoroughly understand their legal liabilities.