As a result of a recent notification of Thailand's Capital Market Supervisory Board shareholders of listed companies may be required to make a tender offer for the shares in the listed company from 1 August 2009 if they act in concert.

Extending the reach of the tender offer rules

Presently, shareholders of listed companies are required to make a tender offer for all of the shares in the company if:

  • the aggregate voting rights in the company held by the shareholder and its related parties as a result of a share acquisition reach or exceed 25%, 50% or 75% ("trigger points") of the voting rights in the listed company; or
  • the shareholder acquires a significant degree of control in an entity that holds shares in the listed company with the result that the aggregate voting rights held by the entity, the shareholder and related parties of the shareholder, reach a trigger point.

Shareholdings of related parties are a factor in determining whether any given share transfer will trigger a tender offer, however before 1 August 2009 there was no requirement to take into account the shareholdings of unrelated parties acting in concert. The result was that unrelated shareholders were able to enter into an agreement to control a listed company without triggering a tender offer as long as the individual shareholdings of each shareholder (and its respective related parties) did not reach a trigger point.

From 1 August 2009 onwards, the shareholdings of concert parties will be a factor in determining whether any given share transfer or agreement between concert parties will trigger a tender offer – an acquisition that does not reach a trigger point can trigger a tender offer, as can the entry into an agreement to control a listed company.

"Concert parties"

Shareholders in any one of ten prescribed situations will be regarded as concert parties if they have a joint intention to exercise their voting rights the same way in order to control the voting rights of a listed company. The prescribed situations ("concert party arrangements") include:

  • entering into an agreement regarding the exercise of voting rights of a company or the management of the company through the exercise of voting rights at board meetings or shareholders' meetings
  • sharing the same source of funding or facilities to fund their acquisition of shares
  • granting a proxy for the exercise of voting rights at a shareholders' meeting on a continuous basis (excluding proxies granted to independent directors, custodians and proxy voting services)

From 1 August 2009, shareholders' agreements are likely to be regarded as concert party arrangements and parties to shareholders' agreements are likely to be regarded as concert parties.

Entering into a concert party arrangement after 1 August 2009 can trigger a tender offer

Shareholders that become concert parties by entering into concert party arrangements on or after 1 August 2009 will trigger a tender offer if the aggregate voting rights in the company held by the shareholders and their related parties is 25% or more. All of the shareholders that enter the concert party arrangement after on or after that date would be obliged to jointly make the tender offer (even shareholders holding less than 25% of the voting rights) however the shareholders may agree among themselves which of them should make the tender offer. In other circumstances where one or more of the concert party shareholders acquire additional shares, those shareholders who acquire additional shares will be required to make the tender offer.

Share acquisitions by "pre 1 August" concert parties can trigger a tender offer

Concert party arrangements that existed before 1 August 2009 will not trigger a tender offer on or after 1 August 2009 unless there is an increase in the voting control of an individual concert party (or its related parties) as a result of a share acquisition or if the concert parties enter into a further concert party arrangement.

If the concert parties hold an aggregate of 25% or more of the company's voting rights, the acquisition of any additional voting rights (through the acquisition of even one share) by any of them on or after 1 August 2009 will require the acquirers to make a tender offer unless the aggregate voting control of the concert parties falls to below 25% after the acquisition or the concert party obtains an exemption from the tender offer requirements.