I. Corporate liability deriving from criminal activity
1. Nature of the liability (criminal, administrative) and basis (crimes committed by directors or representatives, in the interest of or for the advantage of the company).
Under Thai law, particularly the provisions of the Penal Code and other specific laws and regulations, juristic persons, including companies, may be held liable for actions deriving from criminal activities.
Except for certain specific laws, Thai law generally does not impose specific liabilities on juristic persons. Instead, offenses under the Penal Code and other specific laws and regulations apply to all persons who commit the offense, irrespective of whether such persons are individuals or juristic persons.
Given the above, it is also possible for juristic persons to be criminally liable for a criminal offense under Thai law.
However, where a law does not specify that a criminal act may be committed by a juristic person, past Supreme Court judgments have indicated that a juristic person may be criminally liable if the criminal act was committed within the scope of the juristic person’s objectives and the juristic person benefitted from the criminal act.
Therefore, whether or not a juristic person may be found to be criminally liable for any offense will ultimately depend on the facts and circumstances surrounding each individual case.
Under the Civil and Commercial Code, the intentions of a juristic person may only be shown through its representatives, such as a director of a company, who act in accordance with the authority given to them and within the objectives of the juristic person.
Therefore, any matters that are undertaken by the representative outside of the scope of the representative’s authority and the objectives of the juristic person, and for which the juristic person did not give its consent or have knowledge of the act will not be binding upon the juristic person and cannot therefore be a representation of the juristic person’s intentions, even if the juristic person ultimately benefitted from the act.
The term ‘representative’ is limited to persons who are appointed in accordance with the juristic person’s bylaws or articles of association and does not include agents or employees of the juristic person.
As noted above, the juristic person’s representative may also be jointly liable if the juristic person is deemed to have committed a criminal offense. This may be the case in the event that the representative gave consent to, or had knowledge of, the commission of the criminal offense and, therefore, the representative also possessed the requisite wrongful intent to commit the offense.
The notion of “instigators,” “principals” and “supporters” of the crime also exists under Thai law. An instigator who causes another person to commit any offense is subject to: (i) the same penalty as the principal if the offense is actually committed; or (ii) one-third of the punishment provided for such offense if the offense is not actually committed (Section 84 of the Thai Penal Code). A supporter who does any act to assist or facilitate the commission of an offense by any other person is subject to two-thirds of the punishment provided for such offense (Section 86 of the Thai Penal Code).
2. Type of crimes/administrative offenses from which, according to the legislature, corporate liability may arise
As noted above, Thai law generally does not stipulate the types of crimes or administrative offenses for which corporate liability may specifically arise.
Given the above, corporate liability may generally arise if the juristic person is deemed to have committed the offenses stipulated under the Penal Code or other specific laws and regulations that impose criminal liabilities for specific acts under such laws.
Many Thai laws and regulations specify certain acts that are deemed offenses and, thus, subject the offender, which may include juristic persons, to criminal liabilities under such laws or regulations.
Samples of such laws include: (i) the Revenue Code; (ii) the Offenses concerning Registered Partnerships, Limited Partnerships, Limited Companies, Associations, and Foundations Act; (iii) the Patents Act; (iv) the Trademark Act; (v) the Copyright Act; (vi) the Consumer Protection Act; (vii) the Immigration Act; (viii) the Factory Act; (ix) the Life and Non-Life Insurance Acts; (x) the Medical Device Act; (xi) the Drug Act; (xii) the Cosmetic Act; and (xiii) the Food Act.
Notwithstanding the above, it should be noted that the Act Supplementing the Constitution Relating to the Prevention and Suppression of Corruption, B.E. 2542 (A.D. 1999) (the “Corruption Act”) does specifically impose a presumption of criminal liability for juristic persons.
Under the Corruption Act, in the event that an offense relating to the giving of bribes, as provided for under the Corruption Act, is committed by a person connected to the juristic person and where the act of bribery was undertaken for the benefit of the juristic person, then the juristic person can also be held liable for the offense if it does not have in place “appropriate internal control mechanisms” to prevent such offenses.
In such a case, the juristic person shall be subject to a fine of at least the value, but not exceeding twice the value, of the damage caused or the benefit received from the commission of the offense. Persons deemed “connected to the juristic person” include its employees, agents or any other person who acts for or in the name of the juristic person, whether or not they have the authority to do so.
Please see further details regarding the “appropriate internal control mechanisms” under our comments in item III.
3. Identification of companies and entities to which liability may apply
We are not aware of any specific Thai laws or regulations that provide for the method of identifying the juristic persons to which liability may apply.
The identity of the juristic persons to which liability may apply will therefore depend on the specific facts and circumstances, specifically as to whether the commission of the offense can be linked to any such juristic person through the acts of the juristic person’s representatives.
4. Corporate liability for crimes committed abroad by its representatives or subsidiaries
We are not aware of any Thai laws or regulations that may impose specific criminal liabilities on juristic persons for acts committed abroad by the juristic person’s representatives.
Moreover, we are not aware of any Thai laws or regulations that may impose specific criminal liabilities on parent companies located in Thailand for acts committed abroad by its subsidiaries.
In this respect, Thai law does recognize the principle of separate corporate personality and, generally, the criminal offenses committed by a subsidiary should not result in the parent company also incurring the liability.
Notwithstanding the above, the Thai Penal Code does specify the general principles and types of offenses that shall be punished under the Thai jurisdiction, even when the offense was wholly or partly committed abroad. The types of such offenses are as follows:
Whenever: (i) any offense is partially committed within the Thai jurisdiction; (ii) the consequence of such offense, as intended by the offender, occurs within the Thai jurisdiction; or (iii) by the nature of the offense, the consequence should occur within the Thai jurisdiction or it could be foreseen that the consequence would occur within the Thai jurisdiction, it shall be deemed that such offense is committed within the Thai jurisdiction.
In case of preparation or attempt to commit any act provided by the law to be an offense, even though it is done outside the Thai jurisdiction, if the consequence of the performance of such act, when carried through to the stage of accomplishment, will occur within the Thai jurisdiction, it shall be deemed that the preparation or attempt to commit such offense is done within the Thai jurisdiction.
Any offense committed within the Thai jurisdiction, or deemed as committed within the Thai jurisdiction shall be deemed committed by the principal, supporter or instigator within the Thai jurisdiction, even though the act of a co-principal, a supporter or an instigator of the offense has been committed outside the Thai jurisdiction.
Whoever commits the following offenses outside the Thai jurisdiction shall be punished in the Thai jurisdiction:
- Offenses relating to the security of the Thai jurisdiction
- Offenses in respect of terrorism
- Offenses relating to counterfeiting and alteration
- Offenses relating to sexuality
- Offenses relating to robbery as well as those relating to gang-robbery committed on the high seas
Whoever commits an offense outside the Thai jurisdiction shall be punished in the Thai jurisdiction, provided that the offense committed is any of the following:
- The offender is a Thai person, and the injured person or the government of the country where the offense has occurred requested for punishment to be imposed.
- The offender is an alien, and the injured person is also a Thai person or the Thai government, and the injured person requested for punishment to be imposed.
The following offenses shall be punished within the Thai jurisdiction in accordance with Section 8:
- Offenses relating to the cause of public dangers
- Offenses relating to documents
- Offenses relating to electronic card
- Offenses relating to sexuality
- Offenses against life
- Offenses against the body
- Offenses relating to the abandonment of children, sick or aged persons
- Offenses against liberty
- Offenses of theft and snatching
- Offenses of extortion, blackmail, robbery and gang-robbery
- Offenses of cheating and fraud
- Offenses of criminal misappropriation
- Offenses of receiving stolen property
- Offenses of mischief
5. Corporate liability in the case of transactions taking place after the commission of a crime (acquisitions, mergers, demergers, etc.)
We are not aware of any specific Thai laws or regulations that provide for corporate liability in case of transactions taking place after the commission of a crime.
Given the above, the general principles for corporate liability arising from criminal activities as discussed under item I.1) will apply.
In this respect, whether or not the entity that survives or is created as a result of the transaction will be held liable for any offenses committed before the transaction is completed will depend on the relevant facts and circumstances.
For example, the purchase of shares in a company alone will not affect the liabilities that may be imposed on the said company for offenses committed prior to the completion of the share acquisition, since the company committing the offense remains the same company.
This may also be true in the case of asset acquisition transactions, as there are no changes to the corporate entity.
However, in the case of mergers, the new company formed as a result of the merger may have to take on the corporate liabilities of the companies that were merged together, since the new company is subject to the liabilities of the merged companies.
II. Applicable sanctions
1. Type of sanctions applicable to the company
The possible sanctions that may be applicable to juristic persons, including companies, are as follows:
The Thai Penal Code specifies that criminal offenses are punishable by imprisonment, confinement, fine, forfeiture of property and capital punishment.
For juristic persons, the possible criminal sanctions are fines and the forfeiture of properties.
However, it should be noted that where the law imposes imprisonment terms, confinement or capital punishments for any relevant offense, the legal representatives of the juristic person, such as the directors of a company, may also be held criminally liable and, thus, may be subject to such penalties.
We are not aware of any administrative sanctions that are specifically provided for juristic persons.
However, the Administrative Procedures Act, B.E. 2539 (A.D. 1996) does provide for the administrative sanctions that may generally be imposed on both individuals and juristic persons. Such administrative sanctions may be classified as follows:
- An administrative order that provides for any person to pay money
- An administrative order that requires the performance or omission of any act
These sanctions may include: (i) temporary suspension from conducting the company’s business; (ii) suspension or revocation of any authorizations, licenses or permits held by the juristic person; and (iii) prohibition on negotiating and entering into contracts with government entities. Ultimately, the imposition of any sanctions will be subject to the relevant laws governing such matters.
2. Interim measures, cease and desist orders, bans and confiscatory measures
The administrative sanctions discussed under item II.1) above may be applied in the case of interim measures. Please also see our comments under item IV. 2).
The specific interim measures that may be applied will ultimately depend on the relevant laws or regulations.
Examples of such interim measures may include: (i) the issuance of an order requiring a person to correct, improve, repair or conduct other necessary measures; (ii) the issuance of an order to temporarily suspend the company from conducting its business; or (iii) other bans and confiscatory measures.
3. Liability of directors or managers for not having adopted (intentionally or negligently) measures for the prevention of the crime
Under the general principles of Thai law, the liabilities of the representatives of a juristic person arise if it is proven that they acted or omitted to act in a way that caused the juristic person to commit the offense (ie, had the intent to commit the offense).
The following Supreme Court decisions have applied this principle of liability and may be used as precedents when considering the liability of the representatives of juristic persons.
- Supreme Court Decision No. 482/2497 ruled that the representative of a juristic person could not use as defense the claim that he acted only as a representative of the juristic person in order to deny his personal guilt from his commission of the offense. Therefore, that person will be jointly liable with the juristic person.
Case summary: The defendant, acting as the managing director of a company, ordered illegal goods into Thailand. The defendant could not claim in his defense that he acted only as a representative of the juristic person to deny his offense.
- Supreme Court Decision Nos. 1612-1613/2518 ruled that if: (i) a representative of a juristic person acting on behalf of the juristic person undertook an action that constituted a criminal offense under the law; and then (ii) the law did not specify that the offense can apply to a juristic person, the representative of the juristic person must be personally liable for the criminal offense.
Case summary: A private limited company was established with a registered capital of THB 70,000. The company had several objectives including the objective of providing loans. The managing director and the director advertised offering loans to the public, but a membership fee and other fees had to be paid first. In fact, as the company may not have had sufficient money to operate its business, it could be seen as operating a business that deviated from its objectives, which could be deemed as the commission of fraud. As such, the representative of the juristic person must be personally liable for the criminal offense.
Moreover, it should be noted that certain laws or regulations in Thailand specifically stipulate that the representatives of a juristic person may be held jointly liable for criminal offenses committed by the juristic person.
Originally, these laws included provisions that specified a legal presumption that when a juristic person commits a criminal offense, then the directors, managers or persons responsible for the operation of the juristic person are presumed to have criminal liability from the beginning, unless they can prove that they were not involved in the commission of the offense.
Following the Constitutional Court’s decision that such presumption of criminal liability is unconstitutional and unenforceable, the Act Amending the Law on the Criminal Liability of Representatives of Juristic Persons (the “Act”) was recently published in the government gazette and came into effect on 11 February 2017.
The purpose of the Act is to remove the abovementioned legal presumption on criminal liability for directors, managers and persons responsible for the operation of a juristic person as specified in 76 items of legislation.
Under the Act, representatives of juristic persons are now presumed innocent, unless it was proven that their action or omission caused the juristic persons to commit the offense in line with the past Supreme Court decisions relating to the liabilities for criminal activities undertaken by representatives of a juristic person.
III. Measures and “models” of prevention and effects of the same on corporate liability and applicable sanctions
1. Consequences of the adoption of a compliance “model” and effects on corporate liability for crimes committed by the company’s managers, directors or representatives (cases in which it is possible to obtain an exemption from liability or a mitigation of the sanction)
We are not aware of any Thai laws or regulations stating that a juristic person must adopt a compliance model to prevent its representatives from committing crimes.
Notwithstanding the above, as noted in our comments under Part I.2), the Corruption Act does stipulate that juristic persons may also be held liable for the specific offenses stipulated under the Corruption Act, which relates in particular to the giving of bribes, if it does not have in place “appropriate internal control mechanisms” to prevent such offenses.
Section 123/5 paragraph 2 of the Corruption Act specifies that if: (i) a person who has committed an offense is related to a juristic person, such as an employee or agent, or is performing for, or on behalf of, that juristic person; and (ii) the offense is committed for the benefit of the juristic person without that juristic person having in place appropriate internal controls to prevent the commission of such an offense, then that juristic person shall be subject to a penalty of a fine of at least the value, but not exceeding twice the value, of the assets received from the commission of the offense.
Given that the concept of “appropriate internal control mechanisms” under Section 123/5 is a relatively new concept in Thailand, it will be interesting to see what the Thai courts will consider “appropriate internal control.”
The National Anti-Corruption Commission (NACC) is in the process of preparing guidelines that the private sector may use to consider as to what would be “appropriate internal control mechanisms.”
We understand that the NACC’s guidelines may be similar to, or in line with, the requirements that have been issued by other foreign regulatory agencies, such as the US Department of Justice’s guidelines with respect to the FCPA or the UK Bribery Act guidelines issued by the UK’s Serious Fraud Office.
2. Modality according to which a compliance “model” must be adopted in order to benefit from exemption from responsibility or mitigated punishment (codes of ethics, procedures, etc.)
We understand that the draft guidelines currently being considered by the NACC stipulate that the “appropriate internal control mechanisms” must include the following:
- Anti-bribery must be a significant policy issued from the senior management.
- There must be an assessment of the risk with respect to the possibility of giving bribes to government officials.
- Measures concerning circumstances that are exposed to a high risk of bribery must include explicit details.
- The measures must be applicable to the conduct of all persons involved in the juristic person’s business.
- A juristic person must have a sound accounting system.
- A juristic person must have human resource management guidelines that are consistent with the anti-bribery measures.
- A juristic person must have measures that support the reporting of misconduct or suspicious circumstances.
- A juristic person must constantly investigate and evaluate the use of preventive measures against bribery.
As noted above, the draft guidelines are still under consideration by the NACC and have yet to be officially published.
3. Monitoring: independent person or body to control/supervise, with the purpose of verifying the correct application of the “model”; mode of operation of such person or body
We are not aware of any specific independent persons or bodies that have been established in Thailand with the purpose of verifying the correct application of the model for the prevention of general criminal offenses.
Notwithstanding the above, it should be noted that, in addition to the NACC itself, the NACC has also established the Anti-Bribery Advisory Service to provide advice and consultation on the appropriate guidelines and measures in line with the specific requirements of the Corruption Act, which should be taken by juristic persons in order to prevent bribery of government officials.
IV. Judicial proceedings to determine corporate liability
1. Court competent to decide the liability of and penalties applicable to the company
There is no specific court to decide the liability of, or penalties applicable to, juristic persons.
The competent court for corporate liability is the same court that decides on individual liability, and the same procedural rules are also applied.
For example, cases involving criminal offenses will be decided in the Thai criminal courts, irrespective of whether the offense is committed by individuals or juristic persons.
2. Possibility of the application of interim measures
There are no specific interim measures for juristic persons, and the interim measures that apply to individuals also apply to juristic persons.
Section 15 of the Criminal Procedure Code requires that the interim measures used under the Civil Procedure Code (Sections 253 and 254) be applied in criminal cases mutatis mutandis. In this respect, if a case is filed in court against a juristic person, the plaintiff may file a motion requesting the court to order the following interim measures:
- Seize or attach properties in dispute or the properties of the defendant, either in whole or in part, pending the rendition of the court’s judgment. This includes money or properties of third parties for which payment is due to the defendant.
- Obtain an injunction prohibiting the defendant from repeatedly committing or committing in the future any act of tort or breach of contract, or the act disputed in such lawsuit; or obtain any other court order to relieve damage or nuisance that might be inflicted on the plaintiff by an act of the defendant; or obtain an injunction temporarily prohibiting the defendant from transferring, selling, moving or disposing of the property in dispute or properties of the defendant; or obtain a court order for the termination or prevention of the vain consumption or deterioration of such properties. Such measures shall be effective until the case becomes final or until the court orders otherwise.
- Subject to the provisions of applicable laws, obtain a court order directing that a registrar, official or any person authorized by law temporarily restrain any registration, change of registry or revocation of registry related to the properties in dispute, properties of the defendant or properties related to the act claimed in the lawsuit until the case becomes final or the court orders otherwise.
In considering the request of the plaintiff, the court must be satisfied that: (i) the complaint has a prima facie case; and (ii) the reason stated is sufficient to apply the requested measure.
3. Plea bargains and related effects on the corporate liability
We are not aware of any Thai laws or regulations or practices that allow juristic persons to enter into plea bargains with respect to corporate liability.
However, similar to liabilities for individuals, a method for the settlement of certain criminal offenses provided for under specific laws is by payment of a fine.
Given the above, a juristic person may pay the fine in accordance with the process under the specific laws in order to settle such offenses.
As a result of the payment of the fine and the settlement, the criminal charges shall be deemed dismissed, and no further prosecution for that offense will be undertaken.
4. Imposition of sanctions against the company
Please see our responses under item II.1) above.
5. Permanence of corporate liability if the crime is extinguished
We are not aware of any specific Thai laws or regulations that provide for the permanence of corporate liability if the crime has been extinguished.
Thus, the general principles under the Penal Code shall also apply to the liability of juristic persons.
Given the above, if a juristic person is deemed to have committed a criminal offense, then such juristic person shall remain liable for such offense for as long as it is still within the prescription periods of the relevant criminal offenses, notwithstanding the fact that the individuals involved in the case, particularly the juristic person’s representatives, are no longer with the juristic person.
V. Corporate liability in multinational groups
1. Liability of parent companies located abroad in the case of offenses committed by directors, managers or representatives of the local company
In principle, a juristic person is considered a separate legal entity from its parent company, and we are not aware of any Thai laws or regulations that specify that a parent company, whether located in Thailand or abroad, will be jointly liable if there is an offense committed by its subsidiary company or by the directors, managers or representatives of its subsidiary in Thailand.
Therefore, no corporate liability would be imposed on parent companies located abroad even if their local company committed a crime under Thai law.
2. Basis of liability and applicable sanctions
There is no law in Thailand imposing corporate liability among a group of juristic persons.
VI. Significant case law concerning corporate liability arising from crimes and draft laws under discussion
1. Significant case law, if any
- Supreme Court Decision Nos. 737-788/2506 ruled that a juristic person is criminally liable if: (i) the criminal act was committed within the scope of the juristic person’s objectives; and (ii) the juristic person benefitted from the criminal act.
Case summary: The manager of a juristic partnership wrongfully imitated a trademark during his duty on trade within the scope of the juristic partnership’s objectives, and the juristic partnership benefitted from the act. This was treated as if the juristic partnership intentionally committed the criminal offense. As a result, the juristic partnership was held jointly liable with the manager.
2. Proposed or contemplated new legislation
At present, we are not aware of any proposed or contemplated legislation that specifically concerns corporate liability arising from crimes.