An update on the Thai Takeover Code

09 June 2011

Contacts

The following changes to the Thai Takeover Code are effective from 1 June 2011.

Currently, any person (Prospective Offeror) who has declared an intention to launch a tender offer (Declaration of Intention) in respect of a target (Target), but subsequently declines to make a tender offer, will be barred from making another tender offer for the Target within one year from the date on which the statement declining to make a tender offer was submitted to the Office of the Securities and Exchange Commission (SEC). From 1 June 2011, the Prospective Offeror will not be barred from making another tender offer for the Target if the tender offer was not launched because any conditions set out in the Declaration of Intention are not satisfied due to circumstances beyond the control of the Prospective Offeror.

The Thai Takeover Code prescribes the following post-tender offer restrictions (Restrictions): (i) for 6 months from the end of the tender offer period, the tender offeror cannot (subject to limited exceptions) acquire any additional securities of the Target at a price higher than the price set out in the tender offer document; and (ii) for one year from the end of the tender offer period, the tender offeror cannot (subject to at least 75 per cent shareholder approval of the Target) take any action which deviates materially from those set out in the tender offer document. Currently, the Restrictions only apply where the tender offeror acquired shares in the Target under the tender offer. From 1 June 2011, the Restrictions will apply irrespective of whether the tender offeror acquired any share under the tender offer.

Currently, a person who reaches or exceeds any trigger point in respect of a Target (Offeror) is exempt from making a mandatory tender offer in respect of the Target if it: (i) reduces its shareholding or controlling interest in the Target below the relevant trigger point (by selling shares on the main board of the Stock Exchange of Thailand or back to the seller) within 7 business days from the date on which the relevant report is required to be submitted to the SEC; and (ii) refrains from the exercise of its voting rights in the Target in respect of the portion of shares which exceed the trigger point. In practice this has meant that the Offeror would need to sell down to the trigger point less one share but could, in theory, still vote (within the relevant period) all of its shares in the Target up to and including the trigger point. There has, therefore, been a minor inconsistency in the two prescribed thresholds. From 1 June 2011, the requirements will be to sell down to below the trigger point (i.e. trigger point less one share) and to refrain from voting in respect of the shares above such point (i.e. trigger point and above).