SEC mandates independent directors' role

Economy April 08, 2014 00:00

By The Nation

By 2016, independent directors must make up at least one-fourth of the boards of licensed securities and derivatives businesses.

Vorapol Socatiyanurak, secretary-general of the Securities and Exchange Commission, said that according to the regulations recently revised by the Capital Market Supervisory Board, licensed securities and derivatives businesses, including those that are part of a conglomerate, must appoint independent directors who will perform their duties with honesty and trust and the customers’ interest foremost in mind. 
The independent directors must also aim to ensure an efficient checks and balances mechanism for their companies, he said. 
From January 1, 2016, new licensees must appoint independent directors in compliance with the specified proportion prior to commencing operations.
Exceptions include investment advisers of relatively small size and with few employees and defunct licensees.
Financial institutions supervised by other lead regulators and licensed to operate securities or derivatives businesses, such as banks and life insurance companies, if they comply with the requirement on independent directors as prescribed by their regulators, will be deemed as having appointed independent directors under the regulations of the Capital Market Supervisory Board.
“Independent directors play a vital role in ensuring corporate governance of business operators and the utmost interest of customers. The SEC therefore proposed this revision by considering the aspects of appropriateness and practicality to promote better business standards and flexibility,” Vorapol said.