Conflict of Interest Clause 5 (7) of Regulations of the Stock Exchange of Thailand Re : Rules, Conditions and Procedures Governing Listing a Effective Data April 1, 1993 (Bor. Jor. 10-3-02)
THE STOCK EXCHANGE OF THAILAND
Explanation No. 2
Subject:Conflict of Interest Clause 5 (7) of Regulations of the Stock Exchange of Thailand Re: Rules, Conditions and Procedures Governing Listing and Delisting of Securities
Introduction
Clause 5 (7) of Regulations of the Stock Exchange of Thailand Re: Rules, Conditions and Procedures Governing Listing and Delisting of Securities provides that one qualification of an applicant which files an application with the Exchange for the approval of its securities in the category of ordinary shares as listed securities is that a conflict of interest shall not exist among the applicant, its management, major shareholders and other companies having the same group of management or major shareholders. In the ordinary course of managing a company the management is usually related to major shareholders as they are the persons who appoint the management of the company. At the same time, the management, in its capacity as the persons responsible for the overall management of the company, is also obligated to shareholders as a whole. Therefore, where an applicant company enters into a transaction involving the management, major shareholders and related persons of the management or major shareholders which may lead to conflict of interest. In considering the listing of securities by the Exchange, if the applicant could not remove such conflict of interest, the Exchange may treat it as a material condition for not listing such securities.
1.In cases where the applicant company enters into a transaction involving relationship with the management, major shareholders including related persons of such persons among which there is a conflict of interest, such conflict of interest may cause the company to lack requisite qualifications as a listed company. In considering the qualifications of a company applying for listing, the Exchange will consider transactions which may lead to a substantial conflict of interest on a case by case basis. Generally, the Exchange will require that an existing conflict of interest be removed before the company is listed or within an appropriate period of time after the listing. However, where such conflict of interest cannot be removed instantly or within an appropriate period of time for some business reasons, the Exchange will consider various relevant factors on a case by case basis.
2.A conflict of interest often exists when the management or a major shareholder has a personal interest in the transaction involving the company. These are, for example, leasing of the company's property, having an interest in a subsidiary, having an interest in a business that are competitors, being a supplier or customer of the company and granting loans to or receiving loans from the company, etc.
In considering the qualifications in respect of a conflict of interest of a company applying for listing in accordance with the Exchange's policy set forth in this Notification, the Exchange will consider various factors, namely:
(1)the persons involved in the conflict and their relationship to the company;
(2)the significance of the conflict in relation to the size and operations of the company;
(3)any special benefits to the management involved in the conflict;
(4)the possibility of the conflict being removed, if possible, how quickly and by what criteria and, if it cannot be removed instantly, the Exchange will consider the agreement or conditions which create the conflict, taking into account the following:
a.whether or not the agreement is essential or beneficial to the operations of the company;
b.whether or not the conditions in the agreement are identical with or better than those available from an unrelated company;
c.whether or not the agreement has been approved by independent directors or shareholders;
d.whether or not the agreement has been sufficiently disclosed to shareholders in the prospectus or other documents.
In some cases the Exchange may require the company to submit to the Exchange a plan to remove a conflict of interest which cannot be removed instantly.
Listed Company Department April 1, 1993 1
THE STOCK EXCHANGE OF THAILAND
Explanation No. 2
Subject:Conflict of Interest Clause 5 (7) of Regulations of the Stock Exchange of Thailand Re: Rules, Conditions and Procedures Governing Listing and Delisting of Securities
Introduction
Clause 5 (7) of Regulations of the Stock Exchange of Thailand Re: Rules, Conditions and Procedures Governing Listing and Delisting of Securities provides that one qualification of an applicant which files an application with the Exchange for the approval of its securities in the category of ordinary shares as listed securities is that a conflict of interest shall not exist among the applicant, its management, major shareholders and other companies having the same group of management or major shareholders. In the ordinary course of managing a company the management is usually related to major shareholders as they are the persons who appoint the management of the company. At the same time, the management, in its capacity as the persons responsible for the overall management of the company, is also obligated to shareholders as a whole. Therefore, where an applicant company enters into a transaction involving the management, major shareholders and related persons of the management or major shareholders which may lead to conflict of interest. In considering the listing of securities by the Exchange, if the applicant could not remove such conflict of interest, the Exchange may treat it as a material condition for not listing such securities.
1.In cases where the applicant company enters into a transaction involving relationship with the management, major shareholders including related persons of such persons among which there is a conflict of interest, such conflict of interest may cause the company to lack requisite qualifications as a listed company. In considering the qualifications of a company applying for listing, the Exchange will consider transactions which may lead to a substantial conflict of interest on a case by case basis. Generally, the Exchange will require that an existing conflict of interest be removed before the company is listed or within an appropriate period of time after the listing. However, where such conflict of interest cannot be removed instantly or within an appropriate period of time for some business reasons, the Exchange will consider various relevant factors on a case by case basis.
2.A conflict of interest often exists when the management or a major shareholder has a personal interest in the transaction involving the company. These are, for example, leasing of the company's property, having an interest in a subsidiary, having an interest in a business that are competitors, being a supplier or customer of the company and granting loans to or receiving loans from the company, etc.
In considering the qualifications in respect of a conflict of interest of a company applying for listing in accordance with the Exchange's policy set forth in this Notification, the Exchange will consider various factors, namely:
(1)the persons involved in the conflict and their relationship to the company;
(2)the significance of the conflict in relation to the size and operations of the company;
(3)any special benefits to the management involved in the conflict;
(4)the possibility of the conflict being removed, if possible, how quickly and by what criteria and, if it cannot be removed instantly, the Exchange will consider the agreement or conditions which create the conflict, taking into account the following:
a.whether or not the agreement is essential or beneficial to the operations of the company;
b.whether or not the conditions in the agreement are identical with or better than those available from an unrelated company;
c.whether or not the agreement has been approved by independent directors or shareholders;
d.whether or not the agreement has been sufficiently disclosed to shareholders in the prospectus or other documents.
In some cases the Exchange may require the company to submit to the Exchange a plan to remove a conflict of interest which cannot be removed instantly.
Listed Company Department April 1, 1993 1