New SEC regulations will help ward off takeovers

Thawachai Pittayasophon, a senior assistant director, said yesterday the new guidelines would allow tender-offer targets to raise capital, issue treasury stock or float preferred shares, to create a dilution effect so that predators would have a higher hurdle to overcome.

Targeted companies might consider paying dividends to shareholders to reduce their cash on hand to make them less attractive, he said.

Under the new regulations , when targeted firms take action to ward off hostile moves, bidders must slow down the tender-offer process and decide whether to continue the process later.

However, the regulations to fight hostile takeovers could be adopted by the targeted companies only upon their shareholders' endorsement, as they would be directly affected.

The World Bank had suggested the securities watchdog introduce the regulations to protect listed companies and shareholders, even though there were few such deals in Thailand, he said. The SEC has been in no hurry to introduce the regulations because it wanted to study the details thoroughly, he said.

According to the SEC Act, executives of targeted companies currently cannot do anything that might cause a substantial change in their company's status, including recapitalisation, significant acquisition or divestment of assets, treasury stock issuance or interim dividend payment.

Vanida Thaneepanichskul, assistant director for corporate governance, said targeted companies could raise capital or take other action to cause a change in their status when half of their shareholders or bidders approved.