Tender offers are a crucial aspect of corporate transactions, particularly in mergers and acquisitions. In Thailand, tender offers are regulated to protect shareholders, ensure transparency, and maintain market integrity. Understanding the legal framework and procedural requirements is essential for any entity considering such a transaction.

1) What is a Tender Offer?

A tender offer is a public invitation by an offeror (individual or entity) to shareholders to sell their shares, often at a premium to the market price. In Thailand, tender offers are typically initiated during takeovers, where the offeror seeks to acquire a significant or controlling interest in a company.

2) Regulatory Framework

Tender offers in Thailand are governed by the Securities and Exchange Act B.E. 2535 (1992), overseen by the Securities and Exchange Commission (SEC). The SEC sets detailed rules and guidelines to ensure that tender offers are conducted fairly, transparently, and in a manner that protects shareholders.

3) Types of Tender Offers in Thailand

3.1) Mandatory Tender Offer

A mandatory tender offer is triggered when an individual or entity acquires 25%, 50%, or 75% of the voting rights in a Thai-listed company (referred to as “Trigger Points”). This requirement ensures that all shareholders have the opportunity to sell their shares under the same terms as the major shareholder.

The Trigger Points are based on the level of shareholding that grants voting rights, giving the shareholder control over the company’s operations or veto power over significant resolutions. In cases of share buybacks (treasury stock), the percentage of total voting rights excludes the repurchased shares, reflecting the actual voting rights.

3.2) Voluntary Tender Offer

A voluntary tender offer occurs when an offeror publicly announces their intention to acquire a company’s shares without reaching the mandatory Trigger Points. This announcement can be made through:

• Mass or electronic media
• Notification to the company’s directors or shareholders holding at least 10% of the company’s total voting rights
• Notification to the Stock Exchange of Thailand or the SEC

If the preconditions for the voluntary tender offer are not fulfilled, the offeror must submit a denial to the SEC within the specified period. However, if the failure to fulfill the preconditions is due to factors beyond the offeror’s control, they are not prohibited from making the tender offer in the future.

3.3) Chain Principle

The Chain Principle applies when an offeror gains control of a company (the “Parent Company”) that holds a significant interest in a Thai-listed company (the “Target Company”). In such cases, the offeror may be required to make a mandatory tender offer for the remaining shares in the Target Company if they indirectly acquire control (e.g., by owning more than 50% of the voting rights or controlling the Board of Directors).

3.4) Partial Tender Offer

A partial tender offer allows an offeror to acquire shares without intending to gain control of the company. This approach is often used when a strategic partner is sought. However, approval must be obtained from more than half of the shareholders, as well as the SEC, since a partial offer may limit shareholders’ rights to sell all their shares during a change of control.

4) Key Requirements for a Tender Offer in Thailand

4.1) Offer Document Submission

The offeror must submit an offer document to the SEC before initiating the tender offer. This document should include comprehensive details about the offer, such as the price, conditions, and rationale behind the offer.

4.2) Offer Price

The tender offer price must comply with the following principles:

• The same price must be offered for securities of the same type.
• The offer price may include multiple options, but one must always be in cash.
• Non-cash considerations must be valued by a financial advisor.
• The price cannot be lower than the highest price at which the offeror or related persons acquired securities within the past 90 days.
• Adjustments to the offer price may be made for events such as dividend payments, changes in par value, or Right Offerings (RO).

5) Timeline for Submitting Tender Offer Forms

5.1) Voluntary Tender Offer

An offeror must take the following actions:

• Submit a statement of intention to make a tender offer (Form 247-3) to the SEC within three business days of the public announcement.
• Submit an offer document (Form 247-4) to the SEC within seven business days after submitting the statement of intention.

If the offeror cannot proceed with the tender offer, they must submit a denial of the offer (Form 247-5) to the SEC within the same time limits.

5.2) Mandatory Tender Offer

For mandatory offers triggered by the acquisition of shares:

• Submit a report on the total number of shares held (Form 246-2) to the SEC by the end of the next business day after reaching any Trigger Point.
• Submit an offer document (Form 247-4) to the SEC within seven business days after submitting the report.
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6) Compliance and Penalties

Failure to comply with tender offer regulations can lead to significant penalties, including fines and legal action. Offerors must ensure full compliance with SEC regulations to avoid legal complications and potential damage to their reputation.

Conclusion

Tender offers are a vital part of corporate governance and market activity in Thailand. For companies and investors considering such transactions, a thorough understanding of the regulatory environment is essential. Engaging with experienced legal advisors who are well-versed in Thailand’s tender offer regulations can ensure smooth navigation of this complex process.

For more detailed advice and tailored assistance on tender offers or other corporate transactions in Thailand, please contact our firm. Our team of experts is ready to guide you through every step of the process.

Yaowarote Klinboon

Executive Partner