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Thailand's latest corporate governance code accepts the need to consider a wide range of interests in making corporate decisions including, in certain situations, those of a company's creditors. However, where the underlying legal environment is fundamentally at odds with the values expressed in a soft law corporate governance code, there is a risk that companies will ignore conflicting requirements, or merely pay them lip service in annual reports. This article investigates one aspect of the protection of corporate creditors by way of company and bankruptcy law, the right to challenge so-called fraudulent transactions. Thai law in this area, as in the areas of company law and bankruptcy law generally, was transplanted from late nineteenth and early twentieth century European models, with English and German law particularly influential. However, a comparative analysis of those sources reveals that Thai law, although similar on the surface, has developed along a markedly different path. Although English and German law have developed different approaches creditor protection to each other, they have both developed an objective test to address the problem of asset dilution in certain circumstances. Thai law, by contrast, retains a requirement for unethical conduct on the part of company insiders for creditors to obtain a remedy. This presents a view of Thai law which is fundamentally different to that of the comparator systems. Ultimately, Thai law favours flexibility for company insiders to manage company property, even to the detriment of creditors, provided that in doing so they act within the boundaries of ethical conduct. These conclusions challenge the assumptions implied by the adoption of the latest corporate governance code and its applicability to the Thai legal environment.
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