On January 13, 2020, Thailand was the first country to report a confirmed case of the COVID-19 outside of China. Since then, the once-in-a-generation pandemic has brought the world to its knees, with both government and private sectors struggling to minimize the disruption to ensure economic stability and business continuity.
In Thailand, notwithstanding the fact that the numbers of infections and mortality rates are relatively low in comparison to the United States and many other countries, all but the most essential of services have been shut down, curfews have been imposed, and people are encouraged, wherever possible, to stay (work from) home to help curb the spread of the virus.
Under Thai law, companies are required to hold their AGM within four months of their fiscal year end – which means that companies with a fiscal year end of December 31, 2019, are required to hold their AGM by no later than April 30, 2020. However, many companies are concerned that requiring shareholders to physically attend an AGM during the spread of a worldwide pandemic is potentially inconsistent with social distancing best-practices and may expose shareholders and other attendees to a greater risk of infection.
In light of these concerns, the Stock Exchange of Thailand (the “SET”) and the Department of Business Development (the “DBD”) have suggested a number of preventive measures that companies may wish to consider when making a determination about how to handle their upcoming AGM’s:
1. Postponement of AGM to a later date
A public company may consider postponing its AGM even though the record date has already been designated (the “Designated Record Date”). The “record date” of a company is the date upon which the shareholder register book of the company was closed in order to determine the identity of the shareholders who will be entitled to attend the AGM.
In order for postpone an AGM, the board of directors may resolve to approve a new AGM date having the same Designated Record Date (i.e. without the need to close the shareholder register book again) as long as (a) the new AGM is held within two months from the original Designated Record Date and (b) the resolution of the board of directors approving the new AGM date has been passed prior to the original Designated Record Date. Alternatively, the company may consider postponing the AGM to a date to be further determined and cancel the Designated Record Date. In this scenario, a new record date can be designated after the situation has been resolved.
2. Declare an Interim Dividend prior to the adjourned AGM
Provided that it is permitted under the company’s Articles of Association, the SET and DBD suggest that if the AGM cannot be held within the timeframe stipulated under applicable law as a result of the COVID-19 virus, and provided the company has retained earnings, its board of directors may consider declaring an interim dividend and informing the shareholders about such interim dividend payment at the adjourned AGM.
3. Video Conference
In order to uphold the principles of social distancing during the pandemic, the DBD encourages companies to hold their AGMs via video conferencing facilities. In the case of a public company whose Articles of Association are silent on the holding of meetings via video conference, the DBD has confirmed that such public company shall be permitted to hold its AGM via video conference for ease of business operation amidst the outbreak.
However, companies should pay careful attention to the fact that the video conference must comply, both technically and otherwise, 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.
Clients considering using video conferencing facilities to hold their AGM are encouraged to contact the authors for additional information about this matter.
4. Granting Proxy to Independent Director
Following the Regulation issued under Section 9 of the Emergency Decree on Public Administration in Emergency Situation B.E. 2548 (Volume 5) which has come into effect since May 3, 2020 any meeting shall not be held at the moment without an approval from the authorities. Pursuant to an official notification dated April 3, 2020 issued under the Emergency Decree on Public Administration in Emergency Situation B.E. 2548, mass gatherings that may cause risks to the spread of any disease, etc. are prohibited. Any person who fails to comply with the foregoing will be subject to a fine of not more than THB 40,000, or imprisonment for a period not exceeding 2 years, or both.
For companies that will hold the meeting (to the extent that the approval is obtained), the SEC encourages shareholders of listed companies to grant proxies to independent director(s) and for listed companies to raise awareness of the use of proxies by highlighting it in the shareholders’ meeting invitation.
A sample of an excerpt from a shareholders’ meeting invitation in respect of the option to appoint independent director(s) as shareholder proxies is show below:
“In light of the current COVID-19 pandemic, the Company recommends that any shareholder who has come into close contact with persons from abroad within 14 days prior to the date of the 2020 Annual General Meeting or who displays symptoms consistent with those of the COVID-19 virus shall appoint one of the independent director(s) of the Company or any person as deemed appropriate 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” issued by the Department of Disease Control, the Ministry of Public Health dated 11 February 2020.”
5. Submission of Clarification Letter to the Ministry of Commerce (the “MOC”)
The DBD has also issued a notification which provides that entities who have failed to hold or delayed in holding meetings in accordance with the specific deadlines prescribed by applicable law as a result of the COVID-19 virus, are permitted to submit a clarification letter explaining the reasons for the delay to the Ministry of Commerce. The clarification letter may be submitted to the MOC after such meetings have been held. Please find a sample clarification letter provided by DBD here, or you may submit clarification via an online platform provided by the DBD here. Should you require any assistance in the preparation of a clarification letter, please do not hesitate to contact any of the authors of this article.
For further information, please contact our team at Kudun and Partners.