A recent notification of Thailand's Capital Market Supervisory Board provides listed companies with an additional year to comply with enhanced requirements applicable to independent directors.
More independent directors in 2010
The Securities Exchange Commission (SEC) previously required listed companies to ensure that at least one third of the company's board members were independent directors before the company's annual general meeting (AGM) in 2009 – the time for compliance has now been extended to before the company's AGM in 2010.
This requirement is in addition to the current requirement for listed companies to have at least three independent directors.
Directors to be more independent in 2011
The SEC had also introduced criteria that independent directors will be required to satisfy, with the result that directors will not be regarded as independent if they had a business relationship with the company in the two years immediately preceding appointment as a director.
However, certain professionals who have had a business relationship with a listed company in their professional capacity can still be appointed as independent directors if the listed company discloses the following information in the notice calling a general meeting for the election of the directors:
- characteristics of the business relationship between the company and the professional;
- reasons and necessity of the professional's appointment as an independent director; and
- a statement that in the opinion of the board of directors, the appointment will not affect the ability of the professional to work and provide its independent opinion as an independent director.
These enhanced requirements will apply to directors appointed by a listed company on or after the date of the company's AGM in 2011. As a result, professionals appointed as independent directors prior to the company's AGM in 2011 will not be subject to the enhanced independence requirements.