FRENCH CORPORATE GOVERNANCE SYSTEM: THE CHOICE FOR THAILAND CORPORATE GOVERNANCE

Abstract

         The possibility of transferring French CG system to Thailand is a very interesting topic, because Thailand and France share the civil-law system. However, the current adoption of UK CG Code is problematic because incompatibility of legal systems between Thailand and the UK.  Moreover, British CG rules are designed to deal with dispersed ownership with well-established governance mechanism, so that they fail to address the issues of family-run business, ownership concentration, interlocking directorate, cross-shareholding, an informal alliance and state-owned enterprises (SOEs).  Thailand uses the civil-law system, whereas the UK uses the common-law system.  Hence, this paper explores this issue through literature review on French CG system, including corporate laws, ownership coordination and inter-firm coordination. After the exploration, it finds that stock markets in France and in Thailand are characterized by ownership concentration dominated by SOEs and family-run firms.  However, French laws and regulators are less dispersed than Thai counterparts, because Thailand has too many CG-related laws and regulators.  Hence, France and Thailand share the same legal system and have similar business environment.  For this reason, it recommends Thailand to reform its CG law on the basis of French CG system.  To do so, Thailand should consolidate both CG-related laws and CG regulators for better enforcement and compliance.  To do so, Thailand has to split its Civil and Commercial Code into a Civil Code and a Commercial Code, and then integrates related statues into the Commercial Code.  To draft a Financial and Monetary Code, Thailand has to combine all finance and banking law together. Finally, it has to tie its CG rules with these codes.