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Legal Update

SEC Relaxes Tender Offer Rules

13 January 2009
Mayer Brown JSM Legal Update
Summary

The Securities and Exchange Commission of Thailand (the "SEC") relaxed the rules regarding the mandatory  tender offer that goes with the acquisition of 25% or more of the total voting rights of a company whose securities are listed on the Stock Exchange of Thailand (the "SET") or which have characteristics as specified in notifications (the "Business").

The relaxed rules, applicable under certain conditions for three months effective 17 November 2008, aim to counter the effects of the global financial crisis and to encourage the liquidity of Thailand's capital market.

Full Update

Under Thai securities law, a person who offers to purchase (without conditions) or does any other act which will result in him acquiring  up to 25% or more of the total voting rights of the Business is required to file a tender offer with the SEC, the SET, the Business and the securities holders of the Business and buy all the securities in the Business. 

The SEC issued special notification No. Tor Jor. 27/2551 (the "Notification") exempts a shareholder from this tender offer requirement  or provides a partial tender offer option in lieu of a tender offer under the following conditions:

Exemption from tender offer requirement

  • There is a share buy-back which increases a shareholder's voting  percentage  up to 25% or more of the total voting rights of the Business;
  • The shareholder acquires additional shares within three months from 17 November 2008; and
  • The resulting voting rights of the shareholder after the acquisition of  shares minus the increase because of the share buy-back is less than  25%. 

For example, a company's buy-back results in a shareholder's original 13% of voting shares increasing to 25%. If this shareholder acquires an additional 11% of voting shares within three months from 17 November 2008, making his total voting shares 36% (25% + 11%) he will be exempted from making a tender offer because the difference of the resulting voting rights after the acquisition and the result of the buy-back is less than 25% (36-(25-13)<25). The Notification essentially removes the effect of the share buy-back from the shareholder's voting rights in computing the 25% benchmark. 
 
Partial tender offer option

  • There is a share buy-back which increases a shareholder's voting  percentage  up to 25% or more of the total voting rights of the  Business;
  • The shareholder acquires additional shares within three months from  17 November 2008; and
  • The resulting voting rights of the shareholder after the acquisition  of shares minus the increase because of the share buy-back exceeds  25%.

For instance, if the  shareholder in our example acquires an additional 13% of shares rather than 11% (making his total voting rights 38%), he will be exempted from the tender offer obligation to buy all outstanding securities of the Business. Instead, the shareholder will entitled to do a partial tender offer to buy up to less than 50% if he can comply with the criteria for a partial tender offer.

For further information, please contact:
Sathaporn Jumsuk ( sathaporn.jumsuk@mayerbrownjsm.com ) Ananya Thongdumrongchai ( ananya.thongdumrongchai@mayerbrownjsm.com )

Learn more about our Bangkok office and Securitisation & Structured Finance practice.

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