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Regulations

​​​​​​​​​​​​​Related Party Transaction

A related party transaction is a transaction between a listed company or its subsidiaries and a related person of the listed company.  As there may be an issue concerning a conflict of interests in this type of transaction, the company is required to focus on a prevention of any potential conflict of interests.  An entering into of a related party transaction shall meet the following criteria:

●   A transaction is entered into in a transparent and fair manner and on an arm's length basis;

●   In the case of a high value transaction, the transaction requires an approval from the shareholders;

●   A transaction is entered into in compliance with the required procedures; and

●   The directors and executives must comply with the relevant criteria in good faith with due care, and prudence (fiduciary duty).​


A Summary of the Criteria 

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Definition:

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●  Executive means a manager or the next four executives succeeding the manager and every person holding and equivalent position to the fourth executive, including persons holding the position of department manager or equivalent or higher in accounting or finance, and shall include director under Section 89/1 of the SEA.
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​​

Calculation of transaction value and duties of a listed company according to the transaction value 

Calculation of a transaction value: The higher amount between the minimum value and the net tangible asset (NTA) shall be applicable.

NTA = Total Assets – Intangible Assets – Liabilities – Non-controlling Interests

The calculation shall be based on the information in the latest consolidated financial statement of the listed company.

Transact​ion Value

Minimum Value*

% NTA*

Small                      

 X £ 1 million baht

X £ 0.03% NTA

Medium         

1 million baht < X < 20 million baht

0.03% < X < 3% NTA

Large    

X ≥ 20 million baht

X ≥ 3% NTA


*The higher amount between the two values shall be applicable.

 

Example:

  • AA Public Limited Company's NTA = THB 2,000 million

Transactio​n Value

Minimum Value*

NTA = THB 2,000 million

% NTA*

%

Value

Small

X £ 1 million baht

X £ 0.03%

X £  0.6 million baht

X £  1 million baht

Medium

1 million baht < X < 20 million baht

0.03% < X < 3%

0.6 < X < 60 million baht

1  < X <  60

Large

X ≥ 20 million baht

X ≥ 3%

X ≥ 60  million baht

X ≥ 60 million baht

 

  • In the case that A Public Limited Company wishes to enter into a 50 million baht related party transaction with its major shareholder, the transaction would be classified as a medium size transaction.

(EN) รายการที่เกี่ยวโยงกัน-edit 8.png Category of transactions under the Notification on related party transactions

          1. Normal business transaction:

Trading transaction normally undertaken by a listed company or a subsidiary for the purpose of operating business, e.g., sale of products, purchase of raw materials, rendering of services.

         2. Supporting normal business transaction:

Trading transaction undertaken by the general businesses of similar nature to a listed company or a subsidiary for the purpose of supporting normal business transaction of their own company, e.g., hiring others to transport goods, advertise products or services.

         3.Transaction regarding rental o​r lease of immovable property of not exceeding three years without any indication that it is based on general trading conditions

         4.Transaction relating to assets or services:

Acquisition/disposal of assets, rights, and rendering/receipt of services

         5.Transaction on granting or receipt of financial assistance:

A listed company or a subsidiary secures/grants a loan, guarantee, or provides asset as collateral.

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General Trading Conditions

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1. Being the prices and conditions are not different from that the Company receives from or offers to general persons;

2. Being the prices and conditions are not different from that the related persons receive from or offer to other general persons;

3. Being the price and conditions which a listed company can prove to be the price and conditions that an operator of similar business offers to general persons;

4. Being the price and conditions which are standard, available in the market, and with a clear reference values;

5. The gross profits and conditions are not different from which a listed company or a related person receives from general persons (in the case of good/service of specific nature or job order).


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Exempted Transactions

o  Section 89/12 of the Securities and Exchange Act provides that an entering into of connected transactions shall be approved by a meeting of shareholders with the exception of a transaction which meets any of the following manners: 

(1) a transaction which is a commercial agreement in a manner a reasonable person enters into with a general party in a similar circumstance, with a commercial negotiation free of his/her influence as the director, executive or related person, as the case may be, and such commercial agreement has been  approved by the board of directors or complies with the principle approved by the board of directors;

(2) granting of loans in accordance with the regulations on welfare of the staff and employees;

(3) a transaction in which the other party to the company is, or both parties are;

(a) a subsidiary or subsidiaries whose shares are held by the company in the amount not less than ninety percent of its total number of shares sold; or

(b) a subsidiary or subsidiaries in which a director, an executive or a related person holds shares or has an interest, whether directly or indirectly, not more than the amount, rate, or has characteristics as prescribed by the notification ​of the Capital Market Supervisory Board;

(4) a transaction in particular category or with value not more than the amount or rate as prescribed by the notification of the Capital Market Supervisory Board.

By virtue of the Notification of the Stock Exchange of Thailand, the following connected transactions are exempted from the obligations prescribed therein: 

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(3) An issuance of new securities to a related person under the following conditions:

o To re-transfer to a third person, whereby:

         • the price of such issued securities must not be lower than the market price of the securities; and

         •  the issuance of such securities does not increase a ratio of a related person's interest in the issued securities.

o  Right Offering.

o  To underwriter with firm commitment.

o  Employee Stock Option Program (ESOP).

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(5) Transaction that is fair and does not cause misappropriation of benefits.

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   Summary of Important Issues ​

1. The duty of a listed company concerning an entering into of a related party transaction shall depend on the types of transaction and transaction value.

2. The transaction value shall be considered by the higher amount of NTA or the value.

3. In calculating the transaction values occurred during the six-month period prior to​​ the date of the transaction, each transaction shall be calculated separately by each related person.


Related Rules and Regulations 

  • The Securities and Exchange Act B.E. 2535 (1992) Section 89/12

  • The Notification of Capital Market Supervisory Board No. TorChor. 21/2551 Re: Rules on Connected Transactions

  • The Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Connected Transactions, 2003





For More Information

Corporate Finance Department 1-3