The governance framework for Thai listed companies—particularly with respect to the protection of shareholders’ rights and the accountability of directors and executives—is established under the Securities and Exchange Act B.E. 2535 (A.D. 1992) (“SEC Act”), the Public Limited Companies Act B.E. 2535 (A.D. 1992) (“PCL Act”), and the regulations of the Stock Exchange of Thailand (“SET Regulations”).
A key pillar of this framework is the regulation of Material Transactions (MT) and Related Party Transactions (RPT) undertaken by listed companies and their subsidiaries. To strengthen investor protection and modernize regulatory practices, the Securities and Exchange Commission (SEC) is holding a public hearing on proposed reforms that will significantly revise the MT and RPT regulatory framework. These new regulations are expected to take effect in the first quarter of 2026.
The proposed reforms aim to enhance clarity and consistency across MT and RPT regulations, simplify compliance while improve strong investor protection, transparency, and encourage shareholders participation in high-impact or conflict-prone transactions, and empower minority shareholders with stronger veto rights.
Key Amendments to MT and RPT Regulations
- Expanded Scope and Aggregation Period
1.1 MT Regulations
- Expanded Scope: The scope of MT regulations, currently limited to asset acquisitions or disposals and the transfer or waiver of rights or claims by a listed company or its subsidiaries, will be broadened to include:
- Lease or hire-purchase agreements (including entry, amendment, or termination) involving all or part of a business or assets, when conducted outside the ordinary course of business.
- Financial assistance to financially distressed parties or any parties that deviate from normal business practice (e.g. aiding an associated company beyond a proportionate shareholding).
- Expanded Aggregation Period: Transactions related to the same project or initiative that have not been approved by shareholders must be combined over a 12-month period from the date of board approval. This extends the current 6-month timeframe under the existing MT regulations.
1.2 RPT Regulations
- Under the proposed criteria, transactions involving the same group of counterparties entering into transactions with the listed company or its subsidiaries, aggregated over a 6-month period from the date of board approval, will remain unchanged.
- However, the criteria for defining the “same group of counterparties” will be expanded to include not only the counterparty’s related parties and close relatives, but also their major shareholders and controlling person.
1.3 Discretion of the SEC in both MT and RPT Regulations
- The SEC will have broader authority to require compliance with MT and RPT regulations where there is evidence that transactions are structured to avoid regulatory oversight.
- For example, if a listed company sets up a subsidiary and related parties contribute assets in exchange for newly issued shares of that subsidiary, the SEC requires RPT compliance, as the subsidiary is acquiring assets from related parties. In such cases, the listed company must adhere to RPT regulations.
- Additionally, if related parties hold over 10% of the subsidiary, the board must explain the rationale behind the transaction, ensure it serves all shareholders’ interests, and disclose conflict-mitigation measures.
- Codified and Clarified Exemptions
To enhance legal certainty, the revised framework will codify existing implicit exemptions based on established practices. It also aims to improve flexibility and streamline processes. The proposed exemptions include:
2.1 Exemptions from the scope of MT Regulations
- Transactions involving current assets carried out in the ordinary course of business are exempt. For example, manufacturers or trading companies buying or selling raw materials or finished goods, and real estate developers acquiring or disposing of land intended for development and sale.
- Investments in low-risk, investment-grade debt securities or share repurchases for liquidity management are exempt. However, all other investments outside the scope of exemptions—including in digital assets or higher-risk securities—must follow MT regulations. Listed companies must obtain board or shareholder approval for the investment scope and size based on the total consideration before proceeding.
- Intra-group transactions, such as those between a listed company and its subsidiaries or among subsidiaries, are exempt. The board of directors must carefully approve any transaction that affects the company’s rights, benefits, or ownership proportion in the assets involved. Additionally, RPT regulations apply if related parties hold more than 10% equity in the subsidiaries involved.
- Incorporation and capital increase of new subsidiaries are exempt; however, any subsequent transactions by these subsidiaries that fall within the scope of MT regulations must comply accordingly.
2.2 Exemptions from the scope of RPT Regulations
The following revision is intended to reduce the regulatory burden on routine, low-risk, or arm’s-length transactions.
- The proposed revision will amend the exemptions under the Notification on RPT to align with Section 89/12(1) of the Securities and Exchange Act. This change will expand exemptions from only ordinary business transactions and related support activities conducted under board-approved general commercial terms to include all RPTs conducted under such terms.
- Other exemption criteria remain unchanged, including:
- Loans under employee and worker welfare regulations;
- Intra-group transactions where the listed company holds at least 90% equity in subsidiaries;
- Transactions with investment entities whose CEOs are appointed by the listed company or its subsidiaries, provided that these entities have no other affiliations with listed company or its subsidiaries;
- Issuance of new shares to related parties through rights offerings, employee stock option plans, firm underwriting arrangements, or private placements at or above market price without increasing related parties’ shareholding.
2.3 Exemptions from the scope of both MT and RPT Regulations
- Thai listed companies that are parent companies of other Thai listed companies will be exempt from the scope of MT and RPT regulations, provided their subsidiaries have already complied with these regulations.
- Additionally, the parent company must not participate in the subsidiary’s board and shareholder meetings regarding RPT approval. Specifically:
- Representatives of the parent company must neither attend nor vote in the subsidiary’s board and shareholder meetings on RPT-related agendas; or
- Representatives of the parent company may attend such meetings but must vote according to guidelines established by the parent company’s board resolution. In this case, related parties are prohibited from attending or voting in the parent company’s board meetings when setting these voting guidelines for the subsidiary’s RPT agenda.
- Simplified Calculations Criteria
To enhance clarity, simplify compliance, and better align with prevailing market practices, the criteria for calculating transaction size under MT and RPT regulations will be revised as follows:
- The “Net Asset Value” (NAV) criteria will replaced the “Net Tangible Asset” (NTA) criteria in both MT and RPT regulations. This revision addresses ambiguities arising from the exclusion of intangible assets under the NTA-based approach.
- The “Net Profit” and the “New Shares of Listed Companies” criteria will replace the “Net Profit from Normal Operations” and “New Securities of Listed Companies or their Subsidiaries” in the MT regulations respectively.
- Strengthened Shareholder Approval and Streamlined Process
4.1 Shareholders’ Veto Right
A key enhancement under the proposed framework is the introduction of a 10% shareholder veto right, complementing the existing requirement for a special resolution at the shareholders’ meeting. If either the Audit Committee or the Independent Financial Advisor (IFA) recommends voting against MT or RPT proposed by the board, shareholders holding at least 10% of the voting rights will have the power to block the transaction. This reform strengthens governance by providing minority shareholders with a critical safeguard against board decisions that may not reflect the broader interests of all shareholders.
4.2 Threshold for Shareholder Approval of MT
Under the proposed revision, the threshold criteria for shareholder approval of MT will be lowered and determined separately based on the financial health of the listed company. The goal is to enhance shareholder oversight, particularly in high-risk scenarios.
(1) Listed companies with a negative NAV or net losses
The threshold for entering transactions that could adversely affect their financial position—such as acquiring shares in a company with negative NAV or net losses, or disposing of shares in a company with positive NAV or net profits—is calculated based on the total consideration as follows:
| Transaction Size | Required Action |
|---|---|
| ≥ 10% | Disclosure + Shareholder approval |
| ≥ 25% | Disclosure + Shareholder approval + IFA opinion |
(2) General Cases of MT
The threshold is calculated based on the highest value of four criteria: NAV, Net profit, Total consideration, and New shares of listed companies, as follows:
| Transaction Size | Required Action |
|---|---|
| ≥ 25% | Disclosure + Shareholder approval |
| ≥ 50% | Disclosure + Shareholder approval + IFA opinion |
4.3 Threshold for Shareholder Approval of RPT
Under the proposed revisions, all RPT not conducted on general commercial terms must conform to one of two categories: Financial Assistance or General RPT Cases. Leases or rentals of real estate with terms of 3 years or less will be classified as General RPT Cases, tightening the regulations by requiring shareholder approval for leases or rental exceeding 20 million baht or 3% of NAV (whichever is higher), whereas the current regulations only require board approval.
(1) Financial assistance to an individual or entity where the listed company or its subsidiaries either hold a smaller shareholding than other related parties or hold no shares at all, and the support exceeds the company’s proportionate shareholding.
| Transaction Size | Required Action |
|---|---|
| < 100 million baht or < 3% of NAV, whichever is lower | Disclosure + Board approval |
| ≥ 100 million baht or ≥ 3% of NAV, whichever is lower | Disclosure + Shareholder approval |
(2) General Cases of RPT
| Transaction Size | Required Action |
|---|---|
| > 1 million baht or > 0.03% of NAV, whichever is higher | Disclosure + Board approval |
| ≥ 20 million baht or ≥ 3% of NAV, whichever is higher | Disclosure + Shareholder approval |
4.4 Streamlined Process
- The requirement to circulate notice for MT transactions sized between 15% and less than 50% to all shareholders will be removed. This change will reduce administrative burden, as investors can access this information on the Exchange website.
- The obligation to submit draft notices for MT and RPT, along with draft IFA opinions, to the SEC for prior review before distribution to shareholders will also be abolished. This change places greater responsibility on the board and IFA to ensure shareholders receive necessary and sufficient information to make informed decisions regarding transaction approval.
- Enhanced Disclosure for Shareholders
To strengthen board accountability and support informed decision-making and oversight by shareholders, the SEC proposes the following revised disclosure requirements:
- To protect the interests of listed companies in situations like auctions or bidding processes, the revised regulations allow companies to seek prior shareholder approval in principle and authorize the board to approve transactions later within the approved scope. After the transaction, companies must disclose the details on the Exchange website, as required by MT regulations.
- Detailed business plans related to MT and RPT—including the timeline, market competition analysis, business opportunities, risk factors, and impact and mitigation plans—must be disclosed via the Exchange website and included in the notice for the shareholders’ meeting.
- Cancellations or failures to execute approved transactions must be promptly disclosed on the Exchange website.
- Progress updates on transactions approved by shareholders (for MT and RPT), or by the board (for RPT), must be disclosed semi-annually via the Exchange website, and annually in the Form 56-1 One Report, published on both the SEC and Exchange websites.
Strategic Implications for Boards and Shareholders
These proposed reforms represent a significant shift in corporate accountability and shareholder protection. The SEC will have expanded authority to require shareholder approval for transactions that materially impact the listed company’s interests or asset ownership, based on the true substance of transactions under MT and RPT regulations. Boards of directors are expected to reinforce their governance practices, upholding higher standards of transparency and fiduciary responsibility—particularly when approving high-risk or complex transactions.
Disclosure requirements will be tightened to ensure that information is clear, timely, and sufficient to support informed investor decision-making. Shareholders—especially minority and institutional investors—will be better equipped to engage in corporate governance, including gaining the power to block transactions that may not align with shareholders’ best interests.
Collectively, these reforms will enhance investor confidence and contribute to a more resilient, transparent, and trustworthy capital market ecosystem in Thailand.
Although these new regulations are expected to take effect in the first quarter of 2026, in practice we observe that both the SEC and SET have already started strengthening their roles in protecting investors to the extent possible under the current regulations, and are using a more conservative approach to interpreting existing regulation. This is, of course, intended to enhance investor confidence and foster trustworthy capital market ecosystem in Thailand as urgently as possible.