A Guide to Navigating Thailand's Corporate Compliance Landscape

Thailand offers an enticing economy and strategic position in Southeast Asia, making it a desirable destination for businesses of all sizes. Yet, succeeding in Thailand demands a solid grasp of the country's corporate compliance landscape. Our latest legal guide explores the key facets of Thai compliance, uncovering the issues, initiatives, priorities, and regulatory bodies that businesses must navigate. Beyond this guide, we do recommend approaching one of the Business Lawyers in Thailand that can be found on Lawzana’s website.

Understanding Compliance Issues in Thailand

While ethical and transparent business practices are universally important, specific compliance concerns are more prevalent in Thailand. Here's a breakdown of some common issues:

What appear to be the most prevalent compliance-related problems affecting Thai businesses? Workers in Thai firms may identify a variety of problems they believe to be occurring. Harassment and Discriminatory Language: A 2020 Nikkei Research & Consulting survey found that when looking at the top three, the most common issue mentioned was harassment or discriminatory language (41.8%) followed by inappropriate use of company expenses (40.4%) and leakage of confidential information (35.8%). But if we look at the top one most common issue, the top two remain the same while false records of working hours (12.1%) jumps in the third most cited of the issues, just slightly ahead of leakage of confidential information (12.0%).

Misuse of Company Resources: Improper use of company resources, like falsifying work hours or leaking confidential information, are additional concerns. These violations, though seemingly minor, can expose deeper issues within the organization's culture and internal control systems. 

Corruption and Collusion: More serious offenses like bribery, collusion, and cartel formation can have severe legal and reputational repercussions.

Data Privacy: The Personal Data Protection Act (PDPA), this act was introduced in 2022 and it mandates robust security measures and user consent protocols for businesses that handle personal information. Despite some initial delays, in part due to the COVID-19 pandemic impact, it is Thailand's first law that regulates data protection. The PDPA applies to all entities, individuals, and online platforms that collect personal information from Thai citizens, including foreign companies. According to the PDPA, personal data includes any information that can identify an individual, such as their name, address, contact number, email address, or ID number.

Drawing inspiration from the European Union’s GDPR, the PDPA incorporates similar provisions but diverges in certain aspects like anonymization. It mandates that organizations establish a legitimate basis for processing personal data and secure informed consent unless alternative lawful grounds exist. For instance, e-commerce websites must acquire specific details from users prior to processing, including their Name, Address, Contact number, and Payment particulars.

Furthermore, the PDPA necessitates entities to institute novel procedures and protocols. For instance, businesses must ensure that the data they collect is pertinent and essential for the services they offer. Failure to comply with the PDPA can lead to severe consequences, including fines of up to 1 million baht and/or imprisonment for a maximum of one year for criminal violations. Violations of administrative regulations could incur fines of up to 5 million baht and punitive damages up to twice the actual damages.

Thai Government Initiatives for Improved Compliance

The Thai government is actively addressing compliance concerns through various initiatives:

• Corporate Governance Center: Established by the Stock Exchange of Thailand (SET), this center provides consulting services and facilitates discussions on best practices in corporate governance.
• Thai Institute of Directors: Founded in 1999, this institute offers specialized training and knowledge resources to board members, empowering them to uphold good corporate governance standards.

Compliance Priorities for Thai Businesses

Operating within the legal framework and adhering to ethical standards are paramount for businesses in Thailand. Here are some key compliance priorities:

Thai Labor Laws: Businesses must comply with all labor laws and regulations, including minimum wages, working hour limitations, and employee safety standards.

Thai Labor Law is too extensive to be covered in one article or legal guide. For this reason, we highly recommend contacting one of the leading Employment & Labor Lawyers in Thailand listed on Lawzana’s website, if you are looking for legal advice or information on this topic. However, here are some pointers as guidance on Thai labor law in the corporate compliance landscape:

The standard working week in Thailand consists of 48 hours, which is the equivalent of eight hours per day. Employees get at least one hour of rest after working for five consecutive hours. Any work beyond the standard hours is considered overtime and paid at 150% of the normal hourly rate. Work during holidays is paid at 300% of the normal hourly rate. Employees are entitled to different types of leave, such as annual leave, sick leave, and maternity leave. After one year of continuous service, they are entitled to a minimum of six paid days of annual leave. Sick leave is available to all employees regardless of their time at the job.

Social Security laws require both employers and employees to contribute to the Social Security Fund. This fund provides benefits for sickness, injury, disability, death, childbirth, and unemployment.

The legislation also protects against certain types of discrimination. For instance, it prohibits the dismissal of female employees due to pregnancy, and bans age-based discrimination, except when it comes to preventing child labor.

Fixed-term contracts are designed for employment with a specific end date, often used for projects with defined completion timelines or seasonal work. Temporary contracts, on the other hand, are suitable for positions like call center jobs, event planning, or short-term projects.

Regarding work-from-home­ arrangements, changes to the­ Labor Protection Act allow remote employe­es to refuse contact from the­ir boss or supervisor outside of work hours. Employers must also tre­at remote workers the­ same as on-site employe­es.

Shareholders in Thailand have­ the right to suggest agenda ite­ms for meetings, take le­gal action against directors for wrongdoing, and vote on decisions like­ employee stock options and discounte­d stock offerings. The law encourage­s and regulates shareholde­r activism. Thailand has adopted a strict anti-corruption policy. Businesses must have­ strong anti-corruption programs to prevent bribery and ille­gal practices.

Anti-Money Laundering (AML) Compliance: Strict AML regulations require businesses to identify and report suspicious financial activities to prevent money laundering and terrorist financing.

Financial institutions (FIs) in Thailand must comply with the country’s AML regulations by adopting a risk-based approach. This means that FIs must abide by the following principles:

• Assess risks: Identify their ML/TF risks
• Develop policies: Create procedures to manage those risks
• Monitor: Implement ongoing mechanisms for monitoring and reporting

Digital Platform Services Act: Enacted in 2023, this law regulates online platforms and service providers.  Compliance requires measures like content moderation, user data protection, and adherence to specific takedown procedures.

A Look at the Regulatory Landscape in Thailand: What are the Key Regulatory Bodies in the Country?

Understanding the different regulatory bodies involved in corporate compliance is crucial in getting a clear picture of the compliance landscape overall.

• Department of Business Development (DBD): Under the Ministry of Commerce, the DBD is responsible for enforcing corporate governance regulations.
• Securities and Exchange Commission (SEC): Overseeing the securities market, the SEC regulates the activities of securities companies, dealers, brokers, and fund managers.
• Bank of Thailand (BOT): The central bank has authority over commercial banks and other lenders, with the power to issue regulations, conduct inspections, and enforce compliance.

Beyond the Legal Basics, What are the Additional Considerations with Corporate Compliance in Thailand?

Maintaining strong corporate compliance in Thailand goes beyond simply adhering to the law and the overall judicial system in Thailand.

Here are some additional factors and features to consider:

• Regular Compliance Training:  Employees at all levels should receive ongoing training on relevant policies and procedures to maintain awareness and instill a culture of ethical conduct.
• Risk Management Framework: Implementing a comprehensive risk management framework helps identify potential compliance issues and develop strategies to mitigate them.
• Internal Audit Function: An independent internal audit function provides valuable oversight and ensures compliance with internal controls and regulations.

Be sure to stay updated on regulations. The Thai legal and regulatory landscape is constantly evolving. Businesses must stay informed about changes and adapt their compliance programs accordingly. You can do this by following our legal guides and other online resources to stay in the loop.

Navigating Thailand's business landscape­ effectively re­quires being proactive. Companie­s that prioritize ethical practices, stay informe­d about rules and regulations and have solid compliance­ programs can build a strong foundation for success in the Thai corporate landscape. By promoting transpare­ncy and accountability, businesses can earn the trust of various stakeholders, minimize legal risks, and e­nsure long-term sustainability in Thailand.

If you have any legal questions, why not use our Ask a Lawyer feature for a free, no obligation inquiry.