The Responsibilities Of A Company Director

In the eyes of the law, a company is a form of juristic person which comes into existence by virtue of the law. It has its own rights, assets and liabilities separate from those of its shareholders and directors. The business of the company must be conducted by a board of directors, consisting of at least one person according to the law and the Bylaws (Articles of Association) of the company.

The responsibilities of a company directors

Section 1167 of Thailand Civil and Commercial Code (CCC) states that the relations between the directors, the company and third persons are governed by the provisions of this Code concerning Agency.

Section 820 states that the principal is bound to third persons by the acts which the agent or the subagent has done within the scope of his authority by virtue of his agency.

For example: An authorized director signs purchase orders to purchase furniture or goods for the company. The creditors can only claim payment from the company, not the director. This is because the company is considered another person, having its own property, rights and responsibilities and the director purchased the goods on the company’s behalf. He acted as an agent for the company.

Now what if the company commits some criminal offense? The Act on the Amendment to Legal Provisions Related to Criminal Liability of Representatives of Legal Entities B.E. 2560 (2017) makes sure that the director, manager, or person responsible for the business operations will be liable for the same offense committed by the company only if the offense results from the instructions or actions of the director, or the director, manager, or the person responsible for the business operations has a duty to give instructions or take action, but omits to do so, which results in such company committing an offense.

We recommend that the directors, who are also employees receiving orders from the Group companies or Headquarters to act on some serious matters, should keep the proof of such orders in case later on the company is found committed a criminal offense, you will not have to be liable on a personal level.