By Piyawannee Watanasakolpunt and Sudthapa Thanathanya
Thailand-based businesses looking to combine operations have been unable to take advantage of a tool found in many other jurisdictions – merger. Instead, businesses have often been forced to choose from less attractive choices, such as share or asset purchases or going through the tedious process of amalgamation, under which the operations of two or more entities are combined under a newly established entity.
Earlier this year, the Office of State Council proposed a bill that would amend the Civil and Commercial Code (the “CCC”) to permit mergers. Under the bill, two or more companies would be permitted to merge operations into one of the companies, with the other company then ceasing to exist.
Treatment of dissenting shareholders
This draft bill introduces a mechanism to address any dispute among shareholders of a proposed merger. Shareholders who do not consent to the merger are entitled to “put” their shares to others as identified by the merging companies at an agreed price or the assessed value of the shares. If such objecting shareholders refuse to sell their shares within 14 days from receiving a buy proposal, the combining companies can proceed with the combination and such objecting shareholders will remain shareholders of the combined company.
Creditors must object to a proposed merger within one month
The CCC allows creditors of amalgamating companies to object to an amalgamation within 60 days from the date a resolution approving the amalgamation. Under the draft bill, creditors will only have one month to object to any proposed merger.
Joint shareholders meeting required to finalize merger
After any issues involving dissenting shareholders and creditors are addressed, the merging companies are required to hold a joint shareholders’ meeting. The agenda for the meeting will include such matters as the company name, list of objectives, capitalization, shareholdings, articles of association, and memorandum of association for the merged company.
After the joint shareholders meeting, the directors of the merging companies must hand over operations to the new directors of the merged company within seven days.
The draft bill has a way to go before it becomes enacted, as it is still subject to a public hearing before being submitted for consideration by the National Legislative Assembly.