The Chairman of the SET board of Directors, Mr. Chavalit Thanachanan, as chairman of the Sub-Committee on Corporate Governance in Thailand, revealed during the award ceremony for good governance companies in 2002 that, "the SET, the SEC, and other agencies in capital markets have campaigned to encourage good governance. The campaign includes drafting guidelines for fostering good governance in a company, creating incentives, providing training and producing publications on the issue, and financing training courses on good governance. 66% of listed companies have attended so far. Moreover, the SET publicly recognized companies with good governance and prosecuted those that engaged in misconduct. Therefore, the results of good governance support was more clearly seen this year than last year."
TRIS had rated listed companies with good governance for the first time in Thailand as part of the campaign for these companies to be publicly recognized. For the year 2002, three companies achieved recognition in the project. They are Bangkok Aviation Fuel Services, the Electricity Generating Public Company Limited, and Thai Farmers Bank. All the three companies have received ratings of "good to very good" in terms of their governance practices.
Mr. Chavalit said, "Creating corporate governance awareness in an organization will succeed only if the management of that organization realizes its importance. Therefore, the management of these three companies can be said to have superior vision and are seen to be striving for the greatest benefit of their shareholders and other related parties. They serve as an exemplary model for other organizations in pushing forth good governance to increase the value of their businesses. The concept requires little investment but gives back great returns. Most importantly, the three companies will have raised the level of corporate governance in Thailand in the long-run."
Mr. Prasarn Trairatvorakul, Secretary-General of the SEC, which initiated the project to rate corporate governance in late 2001, explained that creating incentives is crucial in the introduction of good corporate governance in an organization.
"These corporate governance ratings are a tool that will help investors separate companies with good governance from others. It will also stimulate other companies to improve their performance. Four organizations, the SET, the SEC, the Department of Business Development, and the Revenue Department, will give out gold cards, which will give its holders many benefits," Mr. Prasarn said.
These benefits include increased convenience from the SEC when seeking to recapitalization, such as reducing the time needed when submitting information on share offerings, exemption from the need to make an application for the offering of shares, debentures, and warrants; and a reduction by 50% in transaction and annual fees for share offerings.
The benefits from the SET include the lowering of transaction fees for two years by 50%. This transaction fee includes the fee for the rating but to receive this, the company must apply for rating by no later than December 31, 2003.
The Department of Business Development's incentives include speedy recognition of its business registration and increased convenience in requests for information as well as in legal permit applications, such as changing their accounting cycle, and applications for lost or damaged accounts. They also include possible relaxation of the rules for these companies, such as in regard to accounting and alien business rules.
The Revenue Department will give out privileges, including relaxation of rules in relationship to speedy value-added tax returns for good exporters, and also to allow companies to submit information on taxes - instead of tax officials visiting the company to conduct a probe. In addition, the company may seek a relaxation of the regulations on income tax returns. Instead, the company may have its accounts analyzed, instead of receiving a summons for a tax audit.
Mr. Prasarn said the benefits would be officially announced by mid-February 2003, at a seminar to be held by the National Corporate Governance Committee. The three companies will receive gold cards for receiving ratings in the "good to very good level" for good corporate governance.
TRIS Managing Director, Mr. Vorapat Tothanakasem, said, "apart from the various privileges, the companies will enjoy heightened interest from investors, because both domestic and foreign investors are more inclined to invest in companies with good corporate governance. This would increase the premium for these companies."
"Companies that are eligible for corporate governance rating are listed companies and organizations which want to improve its governance standards. TRIS believes in the year 2003 more companies will sign up for the rating after they realize the benefits of good corporate governance."
