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Legal Update

Easier ESOP requirements for Foreign Companies

5 February 2009
Mayer Brown JSM Legal Update
Foreign companies will find it easier to offer securities to their directors and employees in Thailand -- thanks to two notifications passed by the Securities and Exchange Commission ("SEC").
Full Update
Previously, a foreign company must apply for an approval from the SEC and must comply with a number of requirements to be able to offer an Employee Stock Option Plan ("ESOP") to its directors and employees in Thailand. This includes the offer of shares and warrants convertible to shares of a foreign company. However, a foreign company may be exempted from such requirements if its  shares are registered in a stock exchange which is a member of the World Federation of Exchanges, or in a stock exchange governed by a member of the International Organisation of Securities Commissions.
Further, a registration statement and draft prospectus were also required if the ESOP were offered to more than 35 directors or employees within 12 months or the aggregate value of such ESOP was in excess of THB 20 million. Based on these, SEC will decide if it will approve the ESOP of the foreign company.
Last year, SEC simplified things for foreign companies when it issued Notification No. Thor. Jor. 31/2551 and Notification No. Gor. Jor. 18/2551, both of which became effective on 15 December 2008.
Under Notification No. Thor. Jor. 31/2551, SEC approval is no longer required by foreign companies to offer ESOP not only to its directors and employees in Thailand but also to the directors and employees of Thai incorporated companies where the foreign companies hold 20% or more voting rights. 
Notification No. Gor. Jor. 18/2551 exempts foreign companies from submitting a registration statement and draft prospectus prior to offering ESOP.
Nevertheless, foreign companies will still need to report the results of the offer of ESOP, including the details, terms and conditions of the ESOP to SEC within 15 days from the offer.
For further information, please contact:
Sathaporn Jumsuk ( )
Patruetai Siriakraseth ( )
Learn more about our Bangkok office, Corporate and Corporate Finance practices.

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