THAILAND Law and Practice Contributed by: Sunyaluck Chaikajornwat, Chumpicha Vivitasevi, Pratumporn Somboonpoonpol and Threenuch Semaming, Weerawong, Chinnavat & Partners Ltd
9.4 Directors’ Duties Directors’ use of defensive measures must be consist - ent with their fiduciary duties and the duty to act in the best interests of their company. 9.5 Directors’ Ability to “Just Say No” Upon receipt of a tender offer, the target’s directors are obligated to provide information and a recommen - dation to shareholders, acting under a general duty to serve the best interests of the company. The board of the target must: • notify all known shareholders of the receipt of the offer and its terms; • provide its opinions on the current status of the company’s business and forecast future results of its operations, disclosing the assumptions on which the forecast is based and the accuracy of the information concerning the company’s busi - ness given in the offer; • disclose any relationships or agreements between any director of the target and the bidder; • recommend whether shareholders should accept or reject the offer – if the board’s recommendation is not unanimous, the recommendation of each director must be provided separately; and • appoint an independent financial adviser to advise the shareholders on the terms of the offer and whether to accept or reject it – the adviser is required to give its recommendation “with due care in accordance with professional standards, taking account of the interests of minority shareholders”. Litigation is not commonly seen in Thai M&A trans - actions and is not widely reported in public tender offers. In privately negotiated deals, disputes may arise over indemnities, breaches of contract or war - ranty claims, but litigation remains rare. This is largely due to the widespread inclusion of arbitration clauses, which parties favour over court proceedings for their confidentiality, specialised adjudication and efficiency. Moreover, the growing use of warranty and indem - nity (W&I) insurance by foreign investors in Thai M&A 10. Litigation 10.1 Frequency of Litigation
restriction does not invalidate the resolution, it may nevertheless be challenged in court and subsequently revoked. Similarly, a director with an interest in any matter is barred from voting on that matter. Non-compliance does not render the resolution void, but if it results in damage to the company, the company is entitled to seek compensation from the director.
9. Defensive Measures 9.1 Hostile Tender Offers
Hostile tender offers are permitted in Thailand. How - ever, due to the prevalence of large family-controlled or insider-controlled shareholdings in most Thai listed companies, the success of a hostile tender offer is unlikely. 9.2 Directors’ Use of Defensive Measures In the period before a bid is made, there is gener - ally no restriction on a target board taking defensive measures against a hostile takeover. Once a bid is made, the target is restricted from under - taking certain activities during the takeover period, unless approval is obtained from the shareholders’ meeting of the target, as follows: • offering new shares; • acquiring or disposing of material assets; • incurring debt; • entering into or terminating a material contract not in the normal course of business; • buying back shares; and • declaring an extraordinary interim dividend. 9.3 Common Defensive Measures Hostile tender offers are very rare and unlikely to suc - ceed due to the prevalence of large family-controlled or insider-controlled shareholdings in most Thai listed companies, so common defensive measures are not typically employed.
1310 CHAMBERS.COM
Powered by FlippingBook