- Updates on laws and regulations related to business acquisitions - Legal issues for acquisitions of shares by foreign investors - Disclosure requirements and procedures for acquisition of shares in listed companies - Regulatory authorities involved with business acquisitions

1. LAWPLUS 1
Latest Updates on Thailand’s Laws and
Regulations on Business Acquisition
Kowit Somwaiya
Managing Partner, LawPlus Ltd.
ASEAN/Thailand M&A 2016: Legal, Tax & Business Strategies
for Successful Cross-Border Acquisition
15 September 2016
The Landmark Bangkok
www.lawplusltd.com

2. LAWPLUS 2
Presentation Topics
1. Updates on laws and regulations related to business acquisitions
2. Legal issues for acquisitions of shares by foreign investors
3. Disclosure requirements and procedures for acquisition of
shares in listed companies
4. Regulatory authorities involved with business acquisitions

3. LAWPLUS 3
Updates on Laws and Regulations Related to Business Acquisitions /
Amendments to the Civil and Commercial Code (No. 20) B.E. 2557 (A.D. 2
014) and (No. 21) B.E. 2558 (A.D. 2015): Mortgages
• Provisions of mortgage agreement is void if it is contrary to:-
(i) Section 728 (file a lawsuit to enforce mortgage);
(ii) Section 729 (conditions for foreclosure);
(iii) Section 735 (prior notice to transferee of mortgaged assets before
enforcement).
• Mortgagor is not liable more than value of mortgaged property (at the time of
foreclosure or enforcement).
• Mortgagee can sell mortgaged property by auction sale within 1 year from receiving
a notice for auction sale from mortgagor without filing a lawsuit.
• Transferee of mortgaged property can redeem mortgaged property anytime and
within 60 days of receipt of a notice from the mortgagee.

4. LAWPLUS 4
Updates on Laws and Regulations Related to Business Acquisitions /
Amendments to the Civil and Commercial Code (No. 20) B.E. 2557
(A.D. 2014) and (No. 21) B.E. 2558 (A.D. 2015): Guarantees
• Type, purpose, amount, term of guaranteed obligation must be specified.
• Guarantor is liable for only guaranteed amount.
• Agreement for guarantor to be jointly liable with debtor is void (except for
corporate guarantor).
• Creditor must notify guarantor within 60 days from default date, otherwise the
guarantor is discharged from interest incurred after the 60-day period.
• If part of debt is forgiven and if the remaining debt is paid in full, guarantor is
discharged.
• Prior consent for extension of time by a non-financial institution guarantor is not
enforceable.

5. LAWPLUS 5
Updates on Laws and Regulations Related to Business
Acquisitions / Business Collateral Act B.E. 2558 (A.D. 2015)
•Effective on 2nd
July 2016.
•Collateral assets: businesses, claims (accounts receivables), machinery, inventory,
raw materials, intellectual property, etc.
•Business collateral agreement must be made in writing and registered with the
Business Collateral Registration Office, Department of Business Development.
•Collateral receiver must be only a financial institution or other person to be specified
in the Ministerial Regulation.
•Collateral provider can retain possession of the collateral, use, exchange, sell,
distribute and transfer it unless agreed otherwise between the collateral receiver and
the collateral provider.
•Collateral receiver is a secured creditor with preferential rights.
•Licensed collateral enforcer must be appointed to enforce the collateral if the
collateral is a business.

6. LAWPLUS 6
Updates on Laws and Regulations Related to Business Acquisitions /
MOC Ministerial Regulation re: Service Businesses Not Requiring App
roval for Operating by Foreigners (No. 2) B.E. 2559 (A.D. 2016)
• Business activities excluded from FBA:-
(1) commercial banks;
(2) representative offices of banks;
(3) life insurances; and
(4) non-life insurances.
• Not required to obtain FBL or FBC.
• Still required to comply with applicable specific laws.

7. LAWPLUS 7
Updates on Laws and Regulations Related to Business Acquisitions /
Amendment to Bankruptcy Act (No. 8) B.E. 2558 (A.D. 2015)
• Official Receiver (OR) has power to approve or reject payment application,
subject to objection in Court within 14 days.
• Creditors Committee: Not less than 3, not more than 7.
• Minimum requirement for composition request: payment order, composition
amount, composition plan and procedures, payment period, plan for management
of collateral assets and guarantee.
• Creditor abroad can file for debt repayment after the 4-month period if there is a
force majeure event.
• Creditor in Thailand can file for debt repayment after the 2-month period if there is
a force majeure event.

8. LAWPLUS 8
Updates on Laws and Regulations Related to Business Acquisitions /
Amendment to Bankruptcy Act No. 9 B.E. 2559 (A.D. 2016)
• Business rehabilitation for individual and SME.
• Debt not less than THB2 million for individual.
• Debt not less than THB3 million for group of persons, non-registered partnership,
ROP, limited partnership.
• Debt more than THB3 million but less than THB10 million for limited company.
• Cashflow test, in addition to liquidity test, etc. is allowed.
• Petition for rehabilitation must be accompanied by a rehabilitation plan approved
by creditors holding 2/3 of total debt.

9. LAWPLUS 9
Legal Issues for Acquisitions of Shares by Foreign Investors / Foreign
Ownership Limits under the Foreign Business Act B.E. 2542 (A.D.
1999) (“FBA”)
• List 1 prohibited activities: no foreign ownership
• List 2 restricted activities: not more than 40% of all shares
• List 3 restricted activities: not more than 49% of all shares
• FBL or BOI investment promotion certificate, etc. plus FBC must be obtained
before operating restricted activities.
• MOC and Foreign Business Committee exercise discretion in granting and
rejecting FBL application.

10. LAWPLUS 10
Legal Issues for Acquisitions of Shares by Foreign Investors /
Exceptions of Foreign Ownership Limits
• Activities not listed under the FBA
• Board of Investment (BOI) promotion certificates
• Industrial Estate Authority of Thailand (IEAT) permits
• Exceptions under the Treaty of Amity and Economic Relations between Thailand
and other countries (Thai-US Treaty, Thai-Australia Treaty, AFAS, JTEPA, ACIA)
• Service businesses exempted from List 3(21) of the FBA: securities trading,
investment consulting, mutual fund and private fund management, futures trading,
trustee under the law on trust for transactions in capital market, commercial banks,
representative office of foreign banks, life and non-life insurance, etc.

11. LAWPLUS 11
Legal Issues for Acquisitions of Shares by Foreign Investors /
Approvals from Board of Directors / Shareholders
•G
• Not required by law but may be required under the Articles of Association or the
Shareholders Agreement.
• Share Purchase Agreement is not required by law but a share transfer deed is
required.
• It is a practice to have an SPA with provisions on acquired shares, price and
payment, conditions precedent, management of the target company, post acquisiti
on representations and warranties, term and termination, dispute resolution, etc.

12. LAWPLUS 12
Legal Issues for Acquisitions of Shares by Foreign Investors /
Share Transfer Deed
•G
• Required by law
• Private limited company: signed by the transferor, the transferee and at least one
witness (Section 1129 of the CCC)
• Public limited company: signed by the transferor and the transferee and delivered
to the transferee (Section 58 of the Public Limited Companies Act B.E. 2535 (A.D.
1992)
• Cannot be raised against a third party unless details of the share transfer are recorded
in the Share Register Book of the company.
• Must be affixed with the duty stamp: 0.1% of the paid-up share price or the price
shown in the Share Transfer Deed (whichever is higher), unless executed and kept out
side Thailand.

13. LAWPLUS 13
Legal Issues for Acquisitions of Shares by Foreign Investors /
Share Certificate, New List of Shareholders and Reporting
•G
• Cancelling the current Share Certificate in the name of the transferor.
• Issuing a new Share Certificate in the name of the transferee and affixing the duty
stamp of THB5 for each new Share Certificate.
• Filing a new list of shareholders showing details of new shareholders with the MOC
is required once a year within 14 days from the AGM date but filing it after the
change of shareholders is a practice.
• Reporting change in shareholding structure and shareholders to relevant
authorities, e.g. BOI, IEAT.

14. LAWPLUS 14
Legal Issues for Acquisitions of Shares by Foreign Investors /
Capital Increase
•G
• Required for acquisition of newly issued shares in target company.
• Resolution of shareholders for the target company to increase its registered
capital by issuing new shares.
• Waiver of pre-emptive rights by existing shareholders.
• Acquisition of at least one existing share in the target company by the acquirer
before acquiring newly issued shares.
• Subscription of newly issued shares by the acquirer.
• Registration of the capital increase with the MOC.
• Issuance of a new Share Certificate to the acquirer.
• Filing the capital increase report form with the SET for recording the shares
issued from the capital increase as listed securities.

15. LAWPLUS 15
Disclosure Requirements and Procedures for Acquisition of Shares in
Listed Companies / Acquisition Report and Mandatory Tender Offer
•G
•Acquisition of shares resulting in an increase or decrease of any multiple of 5% or more
of the total shares with voting rights
•A report must be filed with the SEC Office within 3 business days from the date of
acquisition or sale of shares unless a report on a result of the mandatory tender offer is file
d with the SEC Office.
•Acquisition of 25%, 50% or 75% of the total shares with voting rights (trigger point)
triggers a tender offer to acquire all shares.
•Shares for calculating the trigger point include the shares held by:-
(i) related persons of the acquirer (e.g. spouse, minor child, a shareholder
of the acquirer who is holding more than 30% of the total voting
rights of the acquirer); and
(ii) persons under the chain principle (any person/company having significant controlling
power in a company that is the existing shareholders of the target company before the acq
uisition, e.g. holding 50% or more of shares or sending a person to be a director for mana
gement control).

16. LAWPLUS 16
Disclosure Requirements and Procedures for Acquisition of Shares in
Listed Companies / Exceptions for Mandatory Tender Offer and Public
Notice
• Exceptions for mandatory tender offer include (i) acquisition by inheritance; (ii)
payment of dividends by shares; (iii) decreasing proportion of shares or controlling
power to be less than the trigger point.
• Public Notice: The acquirer can proceed by one of the followings with the details
of a name of the acquirer and a specific or approximated amount of shares to be
offered to purchase by the acquirer:-
(i) advertising through media, electronic means or communication networks or other
means in a form of mass transmission of information;
(ii) informing the directors or the manager of the business / target company;
(iii) informing the shareholders holding at least 40% of the total voting rights; or
(iv) informing the SET or the SEC Office.

17. LAWPLUS 17
Disclosure Requirements and Procedures for Acquisition of Shares in
Listed Companies / Tender Offer Filing and Publishing
• The acquirer files the reporting form to report the shares held by the offeror and
the form showing the intention to acquire the shares for business take over with
the SEC Office.
• The acquirer files the tender offer form with the SEC (effective from the following
date after the filing date of the tender offer form).
• The acquirer sends the tender offer and the acknowledgement of the tender offer
to the shareholders, the target company and the SET.
• The target company must prepare an opinion on the tender offer and file it with
the SEC Office and send its copy to all the shareholders.
• The acquirer must publish the tender offer in at least two Thai daily newspapers
and one English daily newspaper.
•

18. LAWPLUS 18
Disclosure Requirements and Procedures for Acquisition of Shares in
Listed Companies / Major Terms and Conditions of Tender Offer
• The tender offer period is 25 to 45 consecutive business days.
• The last offer and the last day of the tender offer must be declared by the
acquirer at least 15 business days before the expiry of the tender offer period if th
e acquirer did not specify in the tender offer on its first day that such offer is the la
st offer which will not be amended.
• Tender offer price must not be lower than the highest price paid for the shares of
the same class in the target company during the period of 90 days before the acq
uirer submits the tender offer with the SEC Office.

19. LAWPLUS 19
Disclosure Requirements and Procedures for Acquisition of Shares in
Listed Companies / Acts Not to Do by Target Company During Tender
Offer Period
• an offer to sell shares for capital increase;
• acquisition or disposal of assets which are significant to business operation with a
value of at least 10% of the total assets;
• payment of interim dividends to the shareholders which is not in a normal course
of business, except for:-
(a) acts under a resolution of the shareholders or the board of directors, prior to the
tender offer date;
(b) acts under a consent given by the acquirer or the SEC Office.
• other acts.

20. LAWPLUS 20
Disclosure Requirements and Procedures for Acquisition of Shares in
Listed Companies / Reporting Tender Offer Results and Restrictions
After the Tender Offer
•G
• The acquirer must:-
(i) report the preliminary result of the tender offer to the SEC Office within 3 business
days before the end of the tender offer period with a copy to the SET;
(ii) report the result of the tender offer after the expiry date of the tender offer
period to
the SEC office, with a company to the SET within 5 business days from the last day
of the tender offer with a copy to the SET.
•Whether or not the acquirer has acquired the shares from the tender offer, the acquirer must
not:-
(i) purchase or act by other means resulting in acquisition of the shares of the target
company at the price or with the remuneration higher than the price or the
remuneration specified in his tender offer for a period of 6 months from the expiry
date of the tender offer;
(ii) carry out the material parts of the tender offer differently from those specified
within the tender offer for a period of one year after the expiry of the tender offer
period.

21. LAWPLUS 21
Regulatory Authorities Involved with Business Acquisitions
•G
• Foreign Business Committee: obtaining foreign business license / foreign
business certificate
• Ministry of Commerce: filing new list of shareholders / registration of the
capital increase
• SEC / Capital Market Supervisory Board (CMSB) / SET: reporting the
acquisition of shares, mandatory tender offer
• BOI / IEAT: obtaining BOI promotion, reporting the share acquisition
• Revenue Department: paying applicable taxes, e.g. stamp duty, income tax
for capital gain

22. LAWPLUS 22
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Tel. +95 9 505 6667
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•www.lawplusltd.com
kowit.somwaiya@lawplusltd.com