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Under current regulations of the Thai SEC and the SET, rights of shareholders have been given high importance. In cases where shareholders interests can be adversely affected by corporate actions, regulations require that the issues must be submitted at the shareholders' meeting for approval. Depending on the impact of the issues, regulations that requires shareholders' decisions can range from a three fourth majority to a three fourth majority with no objection by 5-10 % of minority shareholders. Examples of the former requirements include cases such as capital increase, connected transactions and white wash for less than 50% acquisitions in takeover cases. While the latter will include issues such as employee stock option program, second offering of shares at below market value to a particular class of shareholders or persons, white wash of more than 50% acquisitions in take over cases, and where issuance of convertible debentures or warrant which will have an undue dilution effect for existing shareholders. In addition, the delisting rule of the SET also has the same requirement that there must be approval of three fourth majority and no objection by 10% minority shareholders and the company is also required to make a mandatory offering to the existing shareholders. |
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Regulations of the Thai SEC and the SET are additional to rights of shareholders provided under the Public Limited Company Act. Under that legislation, shareholders are given extensive legal protection in the running of the affairs of the company. Issues that require shareholders' approval range from amendment to the article of association, appointment and remuneration of directors, payment of dividend, issuance of debentures, capital increase and reduction, liquidation and mergers of companies. In addition to such rights, minority shareholders have the right to request the board of directors to hold a special shareholder meeting on any issues that they deem fit and also to call for the appointment of special inspector to examine financial conditions and management of the company. Moreover, minority shareholders can compel the company to take legal action against the management who have been in breach of their duties. Proxies can also be given to any person to exercise such rights and the proxy can be issued specifically for each agenda or can be a general proxy on all the agenda. There is also a continuing effort to provide further protection to shareholders under the Public Limited Company Act by improving on the sufficiency of information that companies have to furnish to investors in advance of the shareholder meeting, reducing the threshold for shareholders to take derivative action against the management of the company, reducing the threshold for minority shareholders to call for meetings, and to add a provision that shareholders can seek court order to stop or compel the company to take any action where it can be proved that shareholders' rights are being oppressed. Most importantly it has been decided that the supervision of listed companies in such area will be transferred from the Ministry of Commerce to the Thai SEC to ensure that supervision and enforcement of the law of listed companies are brought under one organization. |
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The interpretations and conclusions given represent those of the authors. They
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