does legal risk management and compliance really matter? · does legal risk management and...

www.pwc.com/th

16 October 2014Shangri-La Hotel

16th Annual Conference

Does legal risk management andcompliance really matter?

MaximiseShareholder Valuethrough EffectiveTax Planning 2015

PwC

Agenda

- Real Cases!

- Why important?

- Key legal compliance risk elements

- What do you need to comply with, if you are…

- Manufacturer

- Service operator

- Related to UK company

- Related to US corporation

- Issues common to all

- How to manage compliance

Slide 216 October 201416th Annual Conference Maximise Shareholder Value through Effective TAX Planning 2015

PwC

Real casesIt could happen in your organisation!


PwC16 October 2014

16th Annual Conference Structuring for growth – adding value while continuing to managerisks TAX Planning 2015

Slide 4

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PwC

Why Important!The Cost of Compliance

Corporate level

• Fines

• Brand reputation

• Money & time wasted

• Suspension or closure ofbusiness

• Third party claims

• Civil or Criminal actions

• Unenforceable agreements

Individual (personnel) level

• Imprisonment or fine

• Criminal record

• Prohibition from industry

• Civil and/or disciplinary action

• Loss of employment

• Time wasted

• Revocation of profession license


PwC

Key legal – compliance -risks elements

6 pillars ofkey legal compliance

CompanyIndustry

compliance

LicencesTransactionsManagement

HRTax compliance/

Accounting

Corporate Civil and Commercial Code Act Prescribing offences related to Registered

Partnerships, Limited Partnerships, LimitedCompanies, Associations and Foundations

Foreign Business Act Public Limited Company Act Securities and Exchange Act Land Code

Contractual relationship Unfair Contract Terms Act Form vs. Substance Contractual terms and

conditions Know your clients/ customers Risk allocation & mitigation Force majeure vs Hardship

clause Enforceable of agreement

Employment

Labour Protection Act

Labour Relations Act

Working of Alien Act

Social Security Act /Workmen’s Compensation Act

Establishing the Labor Court and Labor CourtProcedure

Occupational Safety, Health and Environment Act

Sample of regulatory authorities: Food and Drug Administration Bank of Thailand Energy Regulatory Commission Office of the National Broadcasting and

Telecommunications Commission Department of Public Works and Town &

Country Planning Office of Natural Resources and

Environmental Policy and Planning

Sample of Licences: BoI certificate Factory Licence Storage of Fuel License Food Distribution Centre License Groundwater License Hazardous Possession License Warehouse License IEAT Etc.

Revenue Department

Tax return filing

VAT/SBT filing

Stamp duty affixed

Customs Department

Excise Department


PwC

What do you need to comply with?

Specific Industry Compliance – Manufacturing Businesses

Responsibility under theFactory Licence

General requirements

• Operate in the specified scopeof activity

• Comply with machinerycapacity

• Appoint environmentalmanagement personnel

• Submit pollution report, e.g.wastewater

• Obtain permission totransport waste out of factory

• Obtain boiler safety annualreport and boiler controlledpermit

Responsibility under the BOI

BOI requirements

• Apply for operation start-upwithin the required period

• Submit BOI annual report

• No mortgage of machinerywithout obtaining prior approval

• Report stoppage of operations formore than 2 months

• Use only new and qualified usedmachinery

• Do not use joint machinery inapproved BOI project withoutBOI approval

Responsibility under otherlaws

- Construction license vsCertificate of use ofbuilding vs Permission forbuilding modification

- Zoning law restrictions

• Town planning

• Aviation

• Forestry area

• Permanent Forest Area

- Trade Competition Act

- FBA

• Toll manufacturing


PwC

What do you need to comply with?

Specific Industry Compliance – Service Business

Common business restricted under the FBA

• Trading business

• After sales service

• Lending service

• Land lease

• ATM location

• Canteen for employees

• Toll manufacturing

Significant regulations governing service business

• Bank of Thailand regulations

• Telecommunications Business Act

• Travel Agency Business and Guide Act

• Hotel Act

• Etc.

With or without remuneration


PwC

If you are related to a UK companyMore concerns on…

• It introduced the offence of corporatefailure to prevent bribery.

• The Act has extra-territorial reach.

• The only defence for companies againstthis liability is to prove that it had inplace adequate procedures to preventbribery.

Did you put in place adequateprocedures to prevent bribery?

There are penalties set out for companies,boards of directors and individuals.

Offence committed by companies ispunishable by a fine (unlimited).

Offence committed by an individualis punishable by imprisonment for aterm not exceeding ten years or to afine, or to both.

Bribery Act

WaterfordCorkKerry

Limerick TipperaryKilkennyWexford

Carlow

Laois

KildareDublinMeath

Offaly

WestmeathGalway

MayoRoscommonLongford

Cavan

SligoLeitrim

Donegal

Monaghan

Louth

Clare Wicklow

Tyrone

LondonderryAntrim

DownArmaghFermanagh

DyfedPowys

WestGlamorgan

MidGlamorgan

GwentSouth

Glamorgan

ClwydGwynedd

GrampianHighlandSkye

StrathclydeLothian

Fife

TaysideCentral

Dumfries andGalloway

Borders

Shropshire

Cornwall

Devon

Somerset

Avon

Dorset

HampshireSurreyBerkshire

OxfordshireGloucestershireHertfordshire

Wiltshire

WestSussex

East Sussex

Kent

Essex

Suffolk

Norfolk

CambridgeshireNorthamptonshire

Lincolnshire

Cumbria

North Yorkshire

Humberside

Nottingham-shire

LancashireMerseyside

Durham

Tyne &WearCleveland

Northumberland

Leicestershire

Hereford &Worcester

WestMidlands

WarwickshireBedfordshireBuckinghamshire

Staffordshire

CheshireDerbyshireSouthYorkshire

WestYorkshireGreater

Manchester

GreaterLondon

IRELAND

NORTHERNIRELAND

SCOTLAND

ENGLAND

WALES

IRELAND

Islay

Arran

Isle of Man

Isle of Anglesey

Isle of Wight

OrkneyIslands

Shetland Islands

WesternIsles

Mull

DUBLIN

BELFAST

LONDON

GLASGOW


PwC


• Recent recommendations of the BaselCommittee on banking on how to managethe risks relating to money launderingand financing of terrorism need to beaddressed.

• Need to demonstrate a robust complianceframework ensuring that each territoryhas sufficient oversight, and that AMLregulatory requirements are beingadhered to both at the local and globallevel.

• Do you know your customers wellenough?

Anti-Money Laundering

WaterfordCorkKerry


Carlow

Laois

KildareDublinMeath

Offaly

WestmeathGalway


Cavan

SligoLeitrim

Donegal

Monaghan

Louth

Clare Wicklow

Tyrone

LondonderryAntrim

DownArmaghFermanagh

DyfedPowys

WestGlamorgan

MidGlamorgan

GwentSouth

Glamorgan

ClwydGwynedd


StrathclydeLothian

Fife

TaysideCentral


Borders

Shropshire

Cornwall

Devon

Somerset

Avon

Dorset



Wiltshire

WestSussex

East Sussex

Kent

Essex

Suffolk

Norfolk


Lincolnshire

Cumbria

North Yorkshire

Humberside

Nottingham-shire


Durham

Tyne &WearCleveland

Northumberland

Leicestershire

Hereford &Worcester

WestMidlands


Staffordshire



Manchester

GreaterLondon

IRELAND

NORTHERNIRELAND

SCOTLAND

ENGLAND

WALES

IRELAND

Islay

Arran

Isle of Man

Isle of Anglesey

Isle of Wight

OrkneyIslands

Shetland Islands

WesternIsles

Mull

DUBLIN

BELFAST

LONDON

GLASGOW


PwC


• The strongest driver for compliancewith antitrust law is the desire toconduct business ethically and to berecognized as doing so.

• There can be no “one-size-fits-all”approach.

• Competition and Markets Authority(“CMA”) is the principal competitionauthority which took over in April 2014.

• CMA investigates mergers and anti-competition practices in markets andalso enforces some consumer laws.

• Are you aware of some degree ofrisk your organisation is facing?

• Have you adopted a code ofconduct to articulate clearly thestandards all employees mustmeet when doing business?

• Do your business leaders showpersonal active support for ethicalbusiness practices?

Competition Act

WaterfordCorkKerry


Carlow

Laois

KildareDublinMeath

Offaly

WestmeathGalway


Cavan

SligoLeitrim

Donegal

Monaghan

Louth

Clare Wicklow

Tyrone

LondonderryAntrim

DownArmaghFermanagh

DyfedPowys

WestGlamorgan

MidGlamorgan

GwentSouth

Glamorgan

ClwydGwynedd


StrathclydeLothian

Fife

TaysideCentral


Borders

Shropshire

Cornwall

Devon

Somerset

Avon

Dorset



Wiltshire

WestSussex

East Sussex

Kent

Essex

Suffolk

Norfolk


Lincolnshire

Cumbria

North Yorkshire

Humberside

Nottingham-shire


Durham

Tyne &WearCleveland

Northumberland

Leicestershire

Hereford &Worcester

WestMidlands


Staffordshire



Manchester

GreaterLondon

IRELAND

NORTHERNIRELAND

SCOTLAND

ENGLAND

WALES

IRELAND

Islay

Arran

Isle of Man

Isle of Anglesey

Isle of Wight

OrkneyIslands

Shetland Islands

WesternIsles

Mull

DUBLIN

BELFAST

LONDON

GLASGOW


PwC

• Does your organisation have any connections with a U.S. entity?

• Are you subject to the FCPA provisions?

• Have you put in place internal controls which are essential todetecting and preventing FCPA violations?

FCPA

If you are related to a US corporationMore concerns on…

MT

WYID

WA

OR

NVUT

CA

AZ

ND

SD

NE

CO

NM

TX

OK

KS

AR

LA

MO

IA

MNWI

IL IN

KYTN

MS AL GA

FL

SCNC

VAWVOH

MINY

PA

MDDENJ

CTRIMA

MEVT

NH

AK HI PR VI

MI


PwC

• Is your company considered as a financial institution under theUS Anti-Money Laundering laws?

• Have you put in place a compliance programme to identify andverify the identity of customers?

Anti-Money Laundering


MT

WYID

WA

OR

NVUT

CA

AZ

ND

SD

NE

CO

NM

TX

OK

KS

AR

LA

MO

IA

MNWI

IL IN

KYTN

MS AL GA

FL

SCNC

VAWVOH

MINY

PA

MDDENJ

CTRIMA

MEVT

NH

AK HI PR VI

MI


PwC

• Is your organisation considered as a foreign financial institutionunder the FATCA?

• There are a number of new or revised responsibilities andrequirements for MNCs on information reporting and withholdingrequirements for payments to U.S. and non-U.S. payees. Are youin compliance with these new requirements?

• Are you aware of the existence of presumption rules that applywith regard to payees who fail to provide valid documentation in atimely manner?

FATCA


MT

WYID

WA

OR

NVUT

CA

AZ

ND

SD

NE

CO

NM

TX

OK

KS

AR

LA

MO

IA

MNWI

IL IN

KYTN

MS AL GA

FL

SCNC

VAWVOH

MINY

PA

MDDENJ

CTRIMA

MEVT

NH

AK HI PR VI

MI


PwC

Issues common to all…

6 pillars ofcommon legalincompliance

CompanyIndustry

compliance

LicencesTransactionsManagement

HRTax compliance/

Accounting

Corporate Missing the filing deadline Non-compliance with the obligations under the CCC Operation of restricted businesses without foreign

business licence

Contractual relationship Non-compliance with the forms

required by the CCC Excessive burdens imposed on

the other party Unauthorised signatories

Employment

Unlawful termination

Non-submission of the company’s work rules

Illegal amendments to employment conditions

Unlawful overtime wage policy

Illegal foreign workers

Temporary stoppage of operations

Failure to obtain regulatory requiredoperation licence, such as: Food Manufacturing Licence Banking Licence Licence for the Energy Industry Operation Telecommunications Licence Tourist Business and Guide Licence Land zoning restriction Environmental limitation

Sample of common absentlicences: Licence for Operation of Controlled

Business Hazardous Materials Business

Licence Food Distribution Centre Licence Storage of Fuel License Non-compliance with the

conditions under the BOI certificate

Tax Authorities

Missing the filing deadline for incometax return

Miscalculation of CIT exemption –non-BOI income

Stamp duty not duly affixed


PwC

How to manage compliance

Identify

Assess

Mitigate/manage

Monitor

Practice


PwC

To foresight & prevent…..

not to find & fix


PwC

Contact

Siripong Supakijjanusorn Vunnipa RuamrangsriPartner PartnerTel: +66 (0) 2344 1124 Tel: +66 (0) 2344 [email protected] [email protected]

Janist AphornratanaDirectorTel: +66 (0) 2344 [email protected]

Thiti Siriphairoj Anuwat NgamprasertkulAssociate Director Associate DirectorTel: +66 (0) 2344 1016 Tel: +66 (0) 2344 [email protected] [email protected]


Thank you

© 2014 PricewaterhouseCoopers Legal & Tax Consultants Ltd. All rights reserved.'PricewaterhouseCoopers' and/or 'PwC' refers to the individual members of thePricewaterhouseCoopers organisation in Thailand, each of which is a separate andindependent legal entity. Please see www.pwc.com/structure for further details.

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