Thailand takes measures to clarify shareholders’ meetings amidst COVID-19 outbreak
Kudun Sukhumananda, Piti Kerdpu and Nutthar Hongchutchaval of Kudun & Partners discuss how businesses in Thailand are having to evolve their working model to maintain business continuity.
The novel coronavirus, known as COVID-19, has continued to spread around the world and Thailand has not been spared from this global crisis since the first reported case at least three months ago. The government and private sectors are struggling to minimise the disruption to ensure economic stability and business continuity. As a result, businesses and taxpayers are having to adapt accordingly in order to manage their obligations during the period.
Some companies may have planned or be planning to have their annual general meetings (AGM). Nonetheless, requiring shareholders to be in one place may expose the shareholders to a greater risk of infection. A delay in the process may have knock-on tax implications and thus it is in the general best interest to ensure as little delay to the standard procedure as possible.
Some of the preventive measures as suggested by The Stock Exchange of Thailand (SET) and the Department of Business Development (the DBD) that they can take include:
1. Postponing the AGM to a later date
A public company may consider postponing the AGM even though the record date has already been designated. The board of directors shall resolve to approve the new AGM date having the same record date provided that the new AGM date is within two months from such record date and the approval of the new AGM date is resolved before such designated record date.
Alternatively, the company may consider postponing the AGM to be held on a date to be further determined and cancel the designated record date. The record date can be designated again after the situation has been resolved.
2. Declaring interim dividends prior to the adjourned AGM
Provided that it is permitted under the articles of association, SET and DBD suggest that if the AGM cannot be held and the company has retained earnings, a public company may consider declaring interim dividend through the board of directors’ resolution and to inform such interim dividend payment at the AGM.
3. Video conferencing
DBD encourages the company to carry out the AGM through video conferencing. In the case of a public company, of which the articles of association does not mention video conferences, the DBD has allowed such a public company to hold AGM through video conference for ease of business operation amidst the outbreak. However, holding any video conference must comply with the Announcement of the National Council for Peace and Order No. 74/2557 on Teleconferences through Electronic Devices, and the Announcement of the Ministry of Information and Communication Technology on Security Standards for
Teleconferences through Electronic Devices B.E. 2557.
4. Granting proxy to independent directors
The SEC encourages the shareholders of listed companies to grant proxy to independent directors as well as encouraging listed companies to raise awareness to the shareholders by highlighting this in the invitation for the shareholders’ meeting. An excerpt of the option to appoint independent directors is below:
“According to the World Health Organisation (WHO), the COVID-19 viral disease has spread across various countries and is now declared a pandemic. In view of the current situation and our continuous efforts to stay abreast with the current updates, the Company hereby recommends that any shareholder who has come or had close contact with persons from abroad within 14 days prior to the date of the 2020 annual general meeting or having the symptoms and conditions reasonably suspected of being infected with the COVID-19 shall appoint any person as deemed appropriate or the independent director(s) of the Company as his/her proxy to attend the meeting and vote on his/her behalf. In this regard, the 2020 annual general meeting will strictly comply with “Recommendations on prevention and control of COVID-19 for meetings, seminars, or other mass gatherings” of the Department of Disease Control, the Ministry of Public Health dated February 11 2020.”
5. Submitting a clarification letter to the Ministry of Commerce (the MOC)
DBD also issued a notification related to entities that may have directly or indirectly been affected by the outbreak. If the entities failed or were delayed in carrying out meetings within the specific deadline prescribed by the relevant law, they are permitted to submit a clarification letter to MOC after holding the meetings.
Pursuant to an official notification dated April 3 2020 issued under the Emergency Decree on Public Administration in Emergency Situation B.E. 2548, mass gathering activities that may cause risks to the spread of any disease, etc. is prohibited. Any person who fails to comply with the foregoing will be subject to a fine of not more than THB 40,000 ($1220), or imprisonment of not over 2 years, or both. However, we note that there has been no clear statement from any relevant authority concluding that the gathering of people such as attending an AGM would not be considered a violation of the notification.