Problems of Criminal Liability of Company Directors in Case of Financial Fraud

Abstract

This independent study explores the scope, conditions, and actions leading to the criminal liability of company directors by analyzing laws from foreign jurisdictions, specifically the United Kingdom and the United States. Renowned international cases, including Enron and Worldcom, serve as benchmarks to contrast the liability parameters with those
in Thailand. The primary objective is to offer recommendations for more potent law enforcement.

The prevailing legislation addressing the criminal liability of directors in Thailand is the Amendment Act of the Law Concerning Criminal Liability of Legal Representatives, B.E. 2560 (2017). This law categorizes 76 laws: 75 specific acts and one under the Civil and Commercial Code. A significant provision of this Act shifts the burden of proof from the accused to the accuser. However, it retains certain unresolved inadequacies.

Focusing on limited companies, the study finds ambiguities in defining wrongful actions, with particular concerns surrounding monetary fraud and the mismatched penalties
for incurred damages. These ambiguities hinder effective law enforcement, necessitating the concurrent application of other criminal statutes. Given these challenges, there’s a pressing need to render the Act on Criminal Liability of Legal Representatives, B.E. 2560 (2017), more explicit and comprehensive.

In light of these concerns, the author proposes an amendment to the Act of B.E. 2499 (1956) that governs offenses in registered partnerships, limited partnerships, limited companies, associations, and foundations. This amendment should delineate offenses and penalties related to financial fraud by directorial boards, supplementing the existing business offenses in Sections 7-24. Additionally, stiffer penalties for board members are suggested to bolster legal enforceability, potentially deterring economic malfeasance and fostering robust governance in limited companies