Disclosure Requirements - Thailand
Disclosure category: 1
According to the Bank of Thailand Act, B.E. 2485 [as amended by the Bank of Thailand Act (No. 4), B.E. 2551], Clearstream Banking S.A. (“CBL”) falls under a legal obligation of disclosure in the case of holdings of Thai issued debt securities.
CBL may also be required under the Financial Institution Business Act (FIBA) B.E. 25511 to disclose to the issuer the identity and holdings of customers who are shareholders of local Thai financial institutions as defined in FIBA B.E. 2551.
In order to comply with the legislations as mentioned above, customers holding Thai issued debt securities or shares of local Thai financial institutions or entering into transactions in the Thai domestic market, must consent and are hereby deemed to consent to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the relevant issuer or the Bank of Thailand, as appropriate) as attorney-in-fact of such customers, under power of attorney to collect from CBL the required information to be disclosed. Customers not willing to give this consent cannot hold such securities/shares in their accounts with CBL.
Customers are advised that, under local regulations, the Bank of Thailand (“BOT”) and the issuing company are entitled to require CBL, through its local custodian, on request and/or on a regular basis, to disclose information or documents relating to the ultimate beneficial owners of Thai issued debt securities and/or shares of local Thai financial institutions held in omnibus accounts maintained by CBL with its local custodian.
Background and legal basis
The monthly disclosure for Thai issued debt securities is made in accordance to Section 10 of the Bank of Thailand Act, B.E. 2485 [as amended by the Bank of Thailand Act (No. 4), B.E. 2551] to BOT. Under these regulations, BOT is entitled to require CBL and/or its customers on a monthly basis, the disclosure of any data, information or document related to the positions recorded with the local custodian by CBL. This obligation of disclosure covers, without being limited to, the identity and holdings of customers, as well as the identity of the beneficial owners of such recorded positions.
Meanwhile, the FIBA B.E. 2551 states the requirements for disclosure to the Bank of Thailand of shareholdings in any local Thai financial institution and the obligation to report threshold crossings in any public listed company derives from Section 246 of the Securitiesand Exchange Act (SEA) B.E. 25352 (amended in 2551).
CBL will not be responsible for any penalties or sanctions or associated costs that could be imposed upon CBL’s safekeeping accounts with its appointed custodian due to a customer's failure to comply with one or more disclosure requirements. Such penalties, sanctions or associated costs will be automatically passed on to the failing customer The customer undertakes to hold CBL harmless and to indemnify CBL from any loss, claim, liability or expense asserted against or imposed upon CBL as a result of the customer failure, whatever the failure, to comply with these disclosure requirements,
Thai issued debt securities
When a participant fails to comply with the disclosure requirements (including, but not limited to, late disclosure) on Thai issued debt securities, under Section 63 of the Bank of Thailand Act, B.E. 2485, BOT is entitled to fine the relevant person, up to a maximum of THB 100,000.
Obligation to report threshold crossings
Shares of local Thai financial institutions
Section 17 of FIBA B.E. 2551, requires that any holding (direct or indirect) of 5% or more of the total number of shares sold (as construed in accordance with the laws of Thailand) in any local Thai financial institution, or a holding company which is a parent of a local Thai financial institution, must be reported to the Bank of Thailand. Whilst Section 18 of FIBA B.E. 2551 states that no person shall hold or possess shares of any local Thai financial institution in excess of 10% of the total number of shares sold (as construed in accordance with the laws of Thailand) unless permitted by the Bank of Thailand. The disclosure responsibility also applies to foreign commercial banks without a branch in Thailand.
Note: According to Section 35 of FIBA B.E.2551 , foreign commercial banks with a branch in Thailand and local Thai financial institutions are not allowed to hold any shares in other local Thai financial institutions.
According to the above disclosure requirements, CBL may be required by these local Thai financial institutions, through CBL’s subcustodian, to provide information of the shareholdings held by CBL’s customers within a deadline set by the local Thai financial institution if such shareholdings exceed one of the above thresholds. If such information cannot be provided within the requested time frame the local Thai financial institution may withhold entitlement on the shares.
Shares of local Thai public listed companies
In accordance with Section 246 of the SEA B.E. 2535 (as amended), an investor, acting alone or in concert with others, acquiring or disposing of securities in any public listed company such that the respective holding crosses or reaches the threshold of any multiple of 5% of the total outstanding voting rights of a listed company is required to submit a Report of Acquisition or Disposition of Securities of a Business (Form 246-2) to the Securities and Exchange Commission (SEC) within three business days after the acquisition or disposal date. These securities include:
- Ordinary shares and preferred shares
An investor is required to report whether his holding has increased or decreased by any multiple of 5% of the total outstanding issued shares (as detailed above).
- Convertible Securities
After taking into consideration the conversion to equity, an investor is required to report whether his equivalent holding has reached any multiple of 5% of the total outstanding voting rights within three business days after the acquisition of the convertible securities. Convertible securities include warrants, transferable subscription rights, convertible debentures, derivative warrants (DW) or any other securities issued with equity convertible features.
- Non-Voting Depository Receipts (NVDR)
NVDR holders are required to report their NVDR holdings and NVDR and shareholdings of related persons, when their aggregate NVDR holdings or combination of NVDRs and shareholding reaches or falls to any multiple of 5% of the underlying company's shares issued. For a combination of listed securities and NVDRs, the form 246-2-NVDR should be submitted to Thai NVDR Co. Ltd within the same time frame. More information is available at www.set.or.th/nvdr.
In relation to the disclosure requirement under FIBA B.E. 2551, the Bank of Thailand currently allows the relevant shareholders to report their holdings by adopting the same Form 246-2. The form must be submitted to the Bank of Thailand within 30 days of the acquisition or disposition of the holdings.
According to Section 19 of FIBA B.E. 2551, any person found to have not complied with the disclosure requirements of Section 17 of FIBA B.E. 2551 is required to dispose of such excess shares within 90 days after the acquisition date. Otherwise, the Bank of Thailand shall request a court order to sell the excess shares.
Under Section 298 of SEA B.E. 2535 (as amended), the penalty for breach of Section 246 of SEA B.E. 2535 (as amended) is imprisonment not exceeding two years or a fine not exceeding THB 500,000 and a further fine not exceeding THB 10,000 for each day on which the breach continues, or both.
1. Year 2551 in the Buddhist calendar corresponds to year 2008 in the Gregorian calendar.
2. Year 2535 in the Buddhist calendar corresponds to year 1992 in the Gregorian calendar.