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Amendments also protect shareholders
DARANA CHUDASRI
Mergers and acquisitions should become easier under new securities regulations aimed at better protecting companies submitting tender offers.
Officials of the Securities and Exchange Commission said new rules would also improve protection for retail shareholders in cases of hostile takeovers.
Thawatchai Pittayasophon, an SEC senior assistant director, said four amendments to the SEC Act had been made regarding corporate takeovers.
Speaking at a conference organised by the Listed Companies Association, Mr Thawatchai said the rules now defined what was known as ''frustration actions'' to protect both tender offerers and retail shareholders.
''In cases of hostile takeovers, companies that are the subject of the takeover attempt can also now take defensive actions such as issue new shares or buyback stock,'' he said.
''But shareholder approval is required for such actions, and clear disclosure is required that the company is the subject to a takeover attempt. Shareholders can then decide whether to accept the takeover or defend against it.''
Vanida Thaneepanichskul, an assistant director for the SEC corporate governance department, said frustration actions included moves by companies to raise capital, issue convertible securities or allow third parties to use shares as underlying assets.
Share buybacks, asset transactions and payment of dividends outside of normal periods were other defensive tactics that companies could take to frustrate a takeover attempt.
''A company cannot take these actions however within the period a tender offer is announced until its expiration unless majority shareholder approval is received,'' Mrs Vanida said.
The amended laws include Section 245, dealing with the definition of a business under the SEC Act; Section 246 and 247, regarding disclosure of shareholdings; and Section 258, which expands coverage of shareholdings to cover related persons such as a spouse or minor child.
Mrs Vanida said the changes to Section 246 and 247 add the clause of parties ''acting in concert'', covering parties co-operating together in voting to exercise control in a company.
Parties deemed to be acting in concert include those with a separate management agreement, parties that receive securities for free or at below market price, or parties receiving financing from the same source for a deal. ''Basically, shares of the concerted parties, including related persons, will be combined to judge compliance with disclosure and tender offer rules,'' she said.
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