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Updates on New Corporate Regulations: Appointment of Appraiser in case of Merger (Thailand)

NO&T Thailand Legal Update

*Please note that this newsletter is for informational purposes only and does not constitute legal advice. In addition, it is based on information as of its date of publication and does not reflect information after such date. In particular, please also note that preliminary reports in this newsletter may differ from current interpretations and practice depending on the nature of the report.

Background

On 18 July 2023, the Cabinet passed a resolution to approve the principles adopted in the draft Ministerial Regulation prescribing criteria, methods, and conditions for the appointment of appraisers B.E. …, as proposed by the Ministry of Commerce, which are to be issued under Section 1239/1, Paragraph Two of the Civil and Commercial Code of Thailand (“CCC”) as amended under the Act on the Amendment of the Civil and Commercial Code (No. 23) B.E. 2565 (2022) (“Act on the Amendment of the Civil and Commercial Code (No. 23)”).

Details of the draft ministerial regulation

Section 1239/1 of the CCC was recently added by virtue of the Act on the Amendment of the Civil and Commercial Code (No. 23) in order to provide a clear criterion for the appointment of an appraiser in the event where a limited company wishes to conduct a merger and the objecting shareholders are unable to agree with the purchaser of the shares on the purchase price. The responsibility of the appraiser is to act as an intermediary and determine the purchase price for the sale and purchase of the shares to ensure the clarity and smoothness of the procedure related to the merger.

Section 1239/1 of the CCC currently stipulates that, in the event that a company passes a special resolution on the merger but certain shareholders object to such merger, the company shall arrange for other purchasers to purchase the shares from such objecting shareholders at the agreed price. If the said purchaser(s) and the objecting shareholders are unable to agree on the purchase price, the purchase price shall be determined by the appraiser. It is also stipulated that the appointment of an appraiser shall be in accordance with the criteria prescribed under the ministerial regulation.

Therefore, it is necessary to issue this draft Ministerial Regulation prescribing criteria, methods, and conditions for the appointment of appraisers B.E. …, to set the criteria, method, and conditions for the appointment of an appraiser in the event that the shareholders (usually minority shareholders who are not satisfied with the purchase price) and the purchaser are unable to agree on the purchase price.

The key takeaways under this draft are as follows:

  • (1)  the definitions of key persons who will be subject to this draft ministerial regulation have been provided, i.e.:
    • (a)  ‘purchaser’ means a person with whom the company makes arrangements for the purchase of shares from a shareholder who objects to the resolution of a merger of the company;
    • (b)  ‘objecting shareholder’ means a shareholder attending a general meeting of the company, which is being held to approve the merger, and having voted to object to such merger when the company passes a special resolution for the merger; and
    • (c)  ‘appraiser’ means a person who appraises and determines the share purchase price of the shares to be bought from the objecting shareholders;
  • (2)  the company is required to appoint an appraiser to appraise and determine the purchase price of the shares to be bought from the objecting shareholders in the event that the purchaser(s) and the objecting shareholder(s) are not able to agree on the purchase price, and prescribe the independence of the appraiser, e.g., the appraiser must not have any conflict of interest and must not be biased;
  • (3)  the qualifications of the appraiser are stipulated, i.e., the appraiser must be a certified auditor in accordance with the accounting profession laws, and the appraiser must hold a position that performs responsibilities related to the appraisal of assets with certification by, approval from, or registration with government agencies or registered associations, or according to the relevant laws, such as 1) arbitrators who are registered with the Office of the Court of Justice for the asset appraisal, 2) Court Specialists for the asset appraisal who are registered with the Office of the Court of Justice, and 3) members of asset appraisal companies or security appraisers certified by the Office of the Securities and Exchange Commission of Thailand (“SEC”); and
  • (4)  the purchaser(s) and the objecting shareholder(s) shall adhere to the purchase price determined by the appraiser, and such purchase price shall be final.
  • (1)  the definitions of key persons who will be subject to this draft ministerial regulation have been provided, i.e.:
    • (a)  ‘purchaser’ means a person with whom the company makes arrangements for the purchase of shares from a shareholder who objects to the resolution of a merger of the company;
    • (b)  ‘objecting shareholder’ means a shareholder attending a general meeting of the company, which is being held to approve the merger, and having voted to object to such merger when the company passes a special resolution for the merger; and
    • (c)  ‘appraiser’ means a person who appraises and determines the share purchase price of the shares to be bought from the objecting shareholders;
  • (2)  the company is required to appoint an appraiser to appraise and determine the purchase price of the shares to be bought from the objecting shareholders in the event that the purchaser(s) and the objecting shareholder(s) are not able to agree on the purchase price, and prescribe the independence of the appraiser, e.g., the appraiser must not have any conflict of interest and must not be biased;
  • (3)  the qualifications of the appraiser are stipulated, i.e., the appraiser must be a certified auditor in accordance with the accounting profession laws, and the appraiser must hold a position that performs responsibilities related to the appraisal of assets with certification by, approval from, or registration with government agencies or registered associations, or according to the relevant laws, such as 1) arbitrators who are registered with the Office of the Court of Justice for the asset appraisal, 2) Court Specialists for the asset appraisal who are registered with the Office of the Court of Justice, and 3) members of asset appraisal companies or security appraisers certified by the Office of the Securities and Exchange Commission of Thailand (“SEC”); and
  • (4)  the purchaser(s) and the objecting shareholder(s) shall adhere to the purchase price determined by the appraiser, and such purchase price shall be final.

Next step

The final draft of the draft ministerial regulation is not yet published and accessible by the public as the draft ministerial regulation is currently under review by the Council of State and the SEC.

This newsletter is given as general information for reference purposes only and therefore does not constitute our firm’s legal advice. Any opinion stated in this newsletter is a personal view of the author(s) and not our firm’s official view. For any specific matter or legal issue, please do not rely on this newsletter but make sure to consult a legal adviser. We would be delighted to answer your questions, if any.

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