A surge in equity private placement during the past few years has prompted the Capital Market Supervisory Board to announce the Notification No. TorJor. 72/2558 dated 28 October 2015 which came into force on 1 December 2015 with an aim of preventing the exploitation of fund raising through private placement of listed companies. Particularly, certain types of private placement of newly issued shares which were formerly deemed approved by the Office of the Securities and Exchange Commission (the "SEC") will now require its prior approval.
In this connection, in one instance, a private placement whereby the shareholders authorise the board of directors to determine the offering price based on the market price (as defined under the relevant rules) at the time of the offering shall be deemed approved by the SEC upon submission of the required documents. In other instances, listed companies are now required, amongst others, to submit an application, together with the required documents, to the SEC for approval, whereby a pre-application consultation and review process may require at least 30 or 45 days (as the case may be) prior to the date of the relevant shareholders meeting.
The above amendment should be read in conjunction with the Capital Market Supervisory Board Notification No. TorJor. 73/2558 dated 28 October 2015, which also came into force on 1 December 2015 and sets out new rules concerning the required particulars of the notice of the shareholders meeting of listed companies for approval of the issuance and offering of securities.
The Amendment No. 5 to the Anti-Money Laundering Act B.E. 2542 (the "AMLA") which came into force on 9 October 2015 has brought certain new changes to anti-money laundering regulations in Thailand with an aim of increasing enforcement efficiency and conformity with international standards.
Amongst other key changes, all ten types of business operator under Section 16 of the AMLA (i.e. in addition to the operators of investment consultancy and e-payment businesses which were originally required under the pre-amended AMLA) will now be required to:
1. implement a policy on customer acceptance and risk management, as well as to conduct customer due diligence in accordance with the ministerial regulations to be further announced;
2. not make any disclosure or act which may cause the customers or third parties to be aware of the customer due diligence, transaction reporting, or sending of information to the Anti-Money Laundering Office ("AMLO"), except in certain cases;
3. monitor the compliance of its staffs who receive training provided by the AMLO; and
4. maintain information and documents concerning customer due diligence for a period of 10 years from the closure of accounts or the cessation of relationship with the customer.
In light of the above, business operator who falls within the ambit of the AMLA should ensure that its anti-money laundering policy and internal handbooks are reviewed and updated in accordance with the recent legislation changes.
On 27 August 2015, an amendment to the Bankruptcy Act B.E. 2483 (as amended) came into effect with an aim of speeding up the debt repayment process by reducing certain steps of the bankruptcy proceedings. Particularly, the official receiver is now empowered to consider and make an order on claims for debt repayment filed by creditors without the need of seeking approval from the court.
Additionally, a creditor who fails to file a claim for debt repayment within the prescribed period (i.e. within two months from the absolute receivership order's publication date, which may be extended at the official receiver's discretion for an additional period of up to two months in case of a creditor residing outside Thailand) as a result of force majeure event is now entitled to seek approval from the court for extended submission period.
The amendment also seeks to improve the clarity of pre-bankruptcy composition application by setting out certain of its required particulars. Further, relevant sanctions under the Bankruptcy Act B.E. 2483 (as amended) have been revised to be more adequate and in line with current economic circumstances.
Following an amendment to the Civil and Commercial Code in respect of guarantees and mortgages which came into effect on 11 February 2015, additional amendments were subsequently taken into consideration by the National Legislative Assembly with an aim of making the legislation better correspond to the business operation in Thailand. In particular, this latest amendment has brought back certain flexibilities in terms of contractual arrangements between certain type of guarantors and creditors which were not allowed under the earlier amendment.
Amongst other significant revisions, a juristic guarantor is re-allowed to agree to be a joint debtor or jointly liable with the debtor and to the extent that a guarantor is a financial institution or engaged in a guarantee business as its ordinary business, to give advance consent to the extension of time by the creditor to the debtor. Additionally, a person lawfully authorised to manage or a person having a control over the operation of the juristic person who has mortgaged his or her assets as collateral to the debt of such juristic person is also allowed to agree to be liable as a guarantor by entering into a separate guarantee agreement.
The above amendment was published in the Royal Gazette on 14 July 2015 and came in to effect on 15 July 2015.
On 29 April 2015, the Stock Exchange of Thailand issued an additional rule imposing a "silent period" in respect of new shares which are privately placed or issued upon conversion of privately placed convertible securities at a price below 90 per cent of the "market price". In general, the term "market price" is determined based on a weighted average trading price of 7 to15 consecutive business days prior to the offering of shares or convertible securities. The rule came into effect on 6 May 2015.
The silent period will be for a period of (i) in case of shares (including convertible securities being offered together with shares), one year from the date on which the offered shares commence trading; and (ii) in case of convertible securities, one year from issuance of the convertible securities, but one-fourths of the silent shares would become available for trading after the first six months of the silent period.
Further, the above rule does not apply to unsubscribed shares or convertible securities from a rights offering that are subsequently privately placed with specific investors at the same or higher than the price offered to the existing shareholders. In any event, a waiver may be granted by the SET under certain circumstances.
With effect from 6 March 2015, foreign ownership limit of insurance businesses has been increased to 25% (from the previous cap of less than 25%) of the total number of shares with voting rights with certain exemptions as may be approved by the Office of Insurance Commission or the Minister of Finance. The recent changes to both Life and Non-Life Insurance Acts have also removed the previous stringent definition of Thai shareholders.
Amongst other key changes, the amended legislations provide additional protection to policy-holders in case of bankruptcy or licence revocation of insurance companies by requiring the insurance funds to compensate the claimed amount without the need for a completion of prolonged bankruptcy proceedings. For this specific purpose, the insurance funds have now been empowered to borrow or issue other financial instruments in accordance with the rules, procedures, and conditions set out by the Fund Management Committee.
On 6 March 2015, the Debt Collection Act B.E. 2558 was published in the Royal Gazette and will come into effect within 180 days after its publication. Being Thailand's first debt-collection law, it is aimed at providing more protections to individual debtor and guarantor against inappropriate or unfair debt collection practices as well as setting a system and due process for debt collection.
Operators of debt collection business will now be required to register themselves with the registrar. The Act further imposes certain restrictions on place, time, and frequency of contact with the debtor as well as prohibits the use of abusive, libellous or deceptive collection methods, disclosure of debtor's indebtedness, or unfair collection fees and expenses. Violation of the law is subject to either imprisonment and a fine, or both.
On 11th February 2015, an amendment to the Civil and Commercial Code in respect of guarantees and mortgages came into effect with an aim at providing more protections to third party guarantors and mortgagors. In light of the amendment, a guarantor's liabilities for future or conditional obligations will be narrowed down and limited only to those specifically referred to in a guarantee agreement. Further, contractual provision which requires the surety to be jointly liable with the debtor or to waive certain statutory rights and defences will be void. Likewise, any agreement imposing unreasonable burden on a mortgagor will be void, including those requiring the mortgagor to be responsible for any shortfall from an enforcement of the mortgage. The amendment has also introduced new notice requirements and more detailed procedures in relation to enforcement of mortgage.
Apart from the above, certain proposed regulatory changes which merit a progress monitoring this year include:
Life and Non-Life Insurance Acts The proposed amendments to both Acts are substantially the same and primarily focus on (i) provision of an additional protection to policy-holders in case of bankruptcy of insurance companies; and (ii) removal of the previously stringent definition of its Thai juristic person shareholders.
Debt Collection Act The draft is aimed at providing more protections to debtors as well as setting a system and process for debt collection. All debt collectors will soon be required to register themselves with the government and all aggressive debt reminders, threats, intimidation and violations of rights of the debtors will be considered illegal, for which a criminal sanction will apply.
Personal Data Protection Act Aiming at providing extensive protection to personal information, the current draft stipulates that all personal information can no longer be collected without consent of the owner and the holder of personal data is forbidden from using or disclosing it to a third party without the owner's express consent. In addition, any transfer of data overseas is prohibited except for limited circumstances. Personal Data Protection Commission will subsequently be established for the purposes of implementing and enforcing the law.
Securities and Exchange Act Based on recent press reports, it appears that the National Legislative Assembly will likely be pushed forward to consider proposed amendments to the Act concerning unfair securities trading practices by imposing certain assumptions on those considered as an insider and higher fine and penalty. If guilty, an offender may not be allowed to be involved in capital market related activities, including trading as long as five years.