Before a Public Takeover Bid | Thailand | Global Public M&A Guide

3. Before a Public Takeover Bid

[Last updated: 1 January 2025, unless otherwise noted]

3.1 Pre-contractual obligations

Depending on the transaction, the M&A process typically starts with the identification of assets, determination of the most appropriate acquisition vehicle and preparation of preliminary documents. Those documents, e.g., non-disclosure and confidentiality agreements, memorandum of understanding and letters of intent, stipulate the obligations of the parties to the transaction and often key terms and conditions of the acquisition agreements. Whether or not such documents form a contract or legally bind the parties depends on their own terms.

3.2 Due diligence

Once the acquirer and the seller have signed the preliminary documents, a due diligence will normally be conducted on the target company. Due diligence will normally be conducted by financial, tax and legal advisers. The areas of focus regarding the due diligence on the target company normally depend on its business and industry, as well as on the type of the acquisition (whether it is a share or asset acquisition).

3.3 Shareholding rights and powers

Under Thai public company law, a shareholder resolution to be passed at the shareholders' meeting generally requires a majority vote, i.e., more than 50%, of the shareholders who attend the meeting and cast their votes. However, for important agenda items, such as capital increases, capital decreases or the amendment of the articles of association of the company, a shareholder resolution would require at least 75% of the total number of the votes of the shareholders who attend the meeting and are entitled to vote.

The table below provides an overview of the different rights and entitlements that are attached to different levels of shareholding within a Thai listed corporation:

Shareholding	Rights
One share	Right to receive notice of shareholders' meetings, and to attend and vote at any shareholders' meeting. Right to proxy another person to attend and vote at any meeting on the shareholder's behalf. Right to examine the directors' register, the minutes of the meetings of the board of directors and the shareholders' meetings, the shareholder register and the balance sheet. Right to propose themselves or another person for a director position. Right to receive dividends.
Five shareholders	Right to apply for a court order to cancel the resolutions of a shareholders’ meeting if the process of the meeting does not comply with the laws or corporate documents of the company.
Two-thirds of attending shareholders by head count	Right to alter the order of the agenda in a shareholders’ meeting.
5% of all votes in the meeting	Right to block voting for whitewash (a waiver of the obligation to make a tender offer by virtue of a shareholders' resolution) where the shares to be held by the acquirer account for 50% or more of all voting rights. Right to block voting for the employee stock option plan (ESOP) in strict cases, e.g., offering of ESOP securities, representing more than 5% of the voting rights of the company, at a price below market price.
5% of all voting rights	Right to bring an action for disgorgement of benefits wrongfully obtained by the director, the executive or a related person. Right to submit a written proposal as an agenda for a shareholders' meeting. Right to apply for a court order to cancel a resolution if there is contravention or failure to comply with the correct procedure for sending a notice for the meeting or voting.
5% of all shares sold	Right to bring a lawsuit to claim compensation or request for an injunction against a director who fails to conduct their fiduciary duties and, as a result, causes damage to the company. Right to request the registrar to appoint an inspector to proceed with the examination of the company's business operation.
10% of all votes in the meeting	Right to block voting for an offering of the company's newly issued shares to the public at a price below the market price. Right to block voting for ESOP.
10% of all shares sold	Right to submit a motion to the court to order the dissolution of the company in case of certain events. Right to request the board of directors to call an extraordinary meeting.
More than 10% of all shares sold	Right to block voting for delisting.
One-fifth (20%) of all shares sold	Right to apply for a court order to cancel the resolutions of a shareholders’ meeting if the process of the meeting does not comply with the laws or corporate documents of the company.
One-third of all shares sold	Right to request for consideration and approval of additional agenda items.
Two-thirds of all votes in the meeting	Right to approve payment of cash or assets to the director(s).
More than 50% (of vote casted)	Right to approve the general business of the company/voting in general (including dividend payment, balance sheet and appointment of an auditor).
50% of all votes in the meeting (vote count) AND 75% of attending shareholders (head count)	Right to approve early removal of director(s).
75% of all votes in the meeting	Right to approve amendments to the articles of association and memorandum of association. Right to approve the sale or transfer of the whole or important parts of the business of the company to other persons. Right to approve the purchase or acceptance of transfer of the business of other companies. Right to approve (i) the entering into, amendment or termination of contracts with respect to the granting of a hire of the whole or important parts of the business of the company, (ii) the entrustment of the management of the business of the company to any other person or (iii) the merger of the business with other persons with the purpose of profit and loss sharing. Right to approve issuance of debentures. Right to approve capital increase and capital reduction. Right to approve dissolution of the company. Right to approve debt to equity conversion. Right to approve amalgamation of the company. Right to approve offering of the company's newly issued shares to the public at a price below 90% of market price. Right to approve the ESOP. Right to approve connected party transactions. Right to approve acquisition or disposal of material assets. Right to approve whitewash.
75% of all shares sold	Right to approve delisting (subject to more than 10% veto rights of all shares sold).

3.4 Types of public M&A transactions

There are three main forms of public M&A in Thailand. These are:

acquisition of shares in a target company;
acquisition of the business or assets of the target company; and
in the context of M&A between public companies, amalgamation or consolidation of two or more public companies into a new entity (strictly speaking, the concept of 'merger' is not recognized in Thai public company law, there being instead the concept of 'amalgamation').
Unlike public companies, the Thai Civil and Commercial Code recognizes the concept of a 'merger' for private companies. This involves the consolidation of two or more private companies into a single entity, with one of the merging companies being a surviving entity.

In addition to these three main forms, there are also some situations in which, for commercial reasons, a combination of acquisitions is necessary. Generally, the transaction begins with a share acquisition to acquire an entire entity, and is then followed by an amalgamation or asset acquisition to dispose of all or a part of the assets to the acquiring entity. In some cases, the transaction may begin with an asset acquisition transaction by the acquiring entity, and then a share acquisition transaction in the acquiring entity.

The consideration for shares or assets in the target company may be in the form of cash, shares in the acquiring companies, other securities, or a combination of these. Currently, the Revenue Department grants certain tax exemption for amalgamation, merger and an asset acquisition transaction with certain conditions. The company will benefit from this exemption if it acquires the assets of a target company.

3.5 Unfair trading practices

The unfair trading practice offenses under Thai securities law are prescribed in the SEC Act. Such offenses mainly include the following:

Dissemination of false statements
This group of offenses include: (i) disseminating or certifying any false or materially misleading statement or information concerning the facts relating to the financial conditions, business operations, the price of securities, or other information relating to a listed company in a manner that is likely to affect the price of securities or the decision making on securities investment, and (ii) analyzing or forecasting the information related to a listed company by using misleading information, failing to consider the accuracy of information, or distorting information, and disclosing this analysis or forecast in a manner that is likely to affect the price of securities or decision making on securities investment.
Insider trading
Insider trading is regarded by Thai laws as an unfair securities trading practice, and it is a criminal offense. A person will only commit an insider trading offense if their action meets all of the elements provided therein. The essence of insider trading consists of the following: (i) an insider (a person knowing or possessing inside information related to a securities issuing company); (ii) conducting prohibited acts in relation to listed securities and securities traded over-the-counter (namely: (a) selling or purchasing shares or entering into a derivatives contract related to securities, or (b) disclosing inside information to another person, directly or indirectly, when the offender knows or ought to know that the receiver may exploit this information to trade shares or enter into a derivatives contract related to securities); (iii) regardless of whether such act is done for their own or another person's benefit.

The SEC Act describes two types of "insider", namely (i) primary insiders and (ii) secondary insiders. The primary insiders are automatically presumed "insiders", which include, but are not limited to, directors, executives, employees, auditors and advisors of a listed company. The secondary insiders, such as a shareholder holding more than 5 percent of the shares, will be presumed to be an "insider" only if they have traded in a different manner from their normal practice.

The SEC Act also specifies exemptions from the insider trading offense, including where actions do not take an advantage of other persons.

Insider trading issues need to be considered both before and during an M&A transaction. In practice, the authorities may investigate the insider trading incident after the completion of the transaction, especially if there is share price movement or they suspect any insider trading.
Market manipulation
The market manipulation offense requires an actual sale or purchase of shares with an intention to mislead the general public as to the share price or the volume of share trading, or to manipulate the target's share price or the volume of share trading to be inconsistent with that under normal market conditions.
Actions disrupting continuity and reliability of trading on the exchange
The SEC Act prohibits actions which impact the continuity and reliability of trading on the exchange, including (i) front running, i.e., a brokerage company and its officers use a client's trading order in any manner that is likely to disadvantage the client for the benefit of oneself or other persons, (ii) placing or cancelling orders in a manner that causes the price or volume of the securities traded to be inconsistent with those under normal market conditions, and (iii) using or allowing another person (a nominee) to use a securities trading account or bank account to conceal a person's identity in such a way that it may allow the user to commit unfair trading practices.

3.6 Civil sanctions

In addition to criminal penalties imposed for offenses under the SEC Act, which include fines and imprisonment, civil penalties have been introduced by the amendment of the SEC Act in December 2016, as an alternative sanction for offenses that could affect the overall creditability and transparency of the capital market. The civil sanctions are applicable to market misconduct, disclosure of false information or non-disclosure of material facts that could influence investment decisions, failure of directors or executives of listed companies to perform fiduciary duties and using or allowing other persons to use a nominee account to engage in market misconduct.

The civil sanctions include monetary penalties, compensation equal to the undue benefit received, prohibition from securities trading for up to five years, a ban from being a director or executive in a listed company or a securities company for up to 10 years, and reimbursement for investigative expenses incurred by the Office of the Securities and Exchange Commission (the "Office of the SEC"). When an offender complies with the civil sanction imposed, the criminal penalty for the same action will be settled.

3.7 5% multiple threshold

Any person, by their own act or acting in concert with others, who either acquires or disposes of shares in an aggregate amount that reaches or crosses any multiple of 5% of the total voting rights of the company, i.e., reaching 5%, 10%, 15% and so on, must report such acquisition or disposition to the Office of the SEC within three business days from the date of the transaction. This requirement provides an early warning mechanism that enables target companies and their shareholders to be aware of every 5% change in the percentage of the voting rights and acts as an alert as to any possible acquirer who may gain material voting rights and control over the target company.

3.8 Mandatory tender offer requirement

Under Thai securities law, any person who has acquired shares, by themselves or acting in concert with others, that results in obtaining or holding up to or exceeding 25%, 50% or 75% of the voting rights in the listed company (each a 'trigger point') must make a mandatory tender offer. The rationale behind this requirement is to give the existing shareholders an opportunity to sell their shares in the listed company when there is a change in control in the company.

3.9 Chain principle

In addition to the direct share acquisition in a listed target company, a tender offer is also required when any person acquires a significant degree of control of an existing shareholder of a listed company, e.g., immediate holding entity. This can be made through direct acquisition of the immediate holding entity or indirectly through the shareholders of the immediate holding entity (intermediate entities). This is the case when the aggregate shareholding of any person in control of the chain of companies reaches or exceeds a trigger point as mentioned earlier, and the person who acquires control in the listed company through the chain principle will also have to make a mandatory tender offer.

Whether or not a person is in control of such entities is defined in two ways: (i) by holding shares representing 50% or more of the total voting rights in the immediate holding entity (in the case of direct control) or in the intermediate entity (in the case of indirect control); or (ii) by the power to control the management or operation of the relevant entity through the nomination of a substantial number of directors.

3.10 Acting in concert

Shares held by a person "acting in concert" must be aggregated with the shareholding of the acquirer when it acquires shares in the listed company.

The key elements in determining whether or not a party is "acting in concert" are:

mutual intention to manage or exercise their voting rights in the same way to achieve common control in the listed company; and
having a relationship or acting together in any of a manner that may lead to acting in concert, such as using the same funding source, acquiring shares at the same time, or having voting arrangements or shareholders' agreements on voting.

Both of these key elements must be met for a party to be considered as acting in concert with another party. However, in practice, the first element of mutual intention will be given more weight by the SEC in determining the matter.

3.11 Related person

In addition to the concept of "acting in concert", the shareholding of the related person(s) of the acquirer and of those parties acting in concert must be aggregated with the shareholding of the acquirer for shareholding reporting purposes and to determine if the mandatory tender offer threshold has been reached.

Related persons include spouses and minor children, ordinary partnerships in which such person or their spouse or minor child is a partner or, broadly speaking, limited partnerships and companies in which such person or their spouse or minor children or the ordinary partnership hold more than 30% of the total contribution or share capital. This includes the shareholding of the related person(s) at every shareholding level. Careful analysis of the details and implications of these provisions must be taken into consideration before acquiring or disposing of any securities in a listed company.

3.12 Disclosure by the target company

The target company must comply with the disclosure rules prior to and during the M&A transaction.

In general, when a material event occurs, a listed company must immediately disclose such relevant information to the SET.

Material events consist of actions such as entering into connected transactions, acquiring or disposing of material assets, increasing the company's capital or any other event which affects, or will affect, the interests of shareholders or any decision to invest in, or in relation to the price of, the shares of the listed company. It is worth noting that when immediate disclosure would prejudice the ability of the company to pursue its corporate aim or when the company's plans or developments are subject to rapid change, the disclosure may properly be deferred to a more appropriate time or until a firm conclusion has been made. The reason is because successive public announcements concerning the same subject but based on changing facts may confuse or mislead the public. For example, in a share acquisition transaction, when the parties sign a memorandum of understanding or a letter of intent, the parties would generally not disclose such fact and information to the SET at that time. This is because the memorandum of understanding or letter of intention normally specifies conditions to be fulfilled by the relevant party before reaching a conclusive definitive agreement. There are still uncertainties and major conditions to be fulfilled by the relevant party. However, at the signing of a definitive agreement (such as a share purchase agreement or a share subscription agreement), the transaction would become firmer and clearer. Hence, the parties would then disclose the facts and background of the transaction to the SET.

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