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:: Question :: My company has been dealt with breach by the State Securities Commission (SSC) due to its breach of the regulation on tender offer of securities. The SSC requested the Board of Management to convene the extraordinary meeting of the GMS to inform shareholders of such breach and, concurrently, to inform shareholders of returning the money paid by them for buying securities if they request. After that, base on the request of the SSC, the Board of Management approved this decision and inform the GMS. However, at the extraordinary GMS, a member of the Board of Management supposes that the GMS has to approve this decision, instead of just informing like that. Is the opinion of the member of the Board of Management right or wrong?
Answer:
According to the Article 13 of the 2006 Law on Securities, registration of a tender offer of shares or bonds is a required obligation of the issuing organization. Accordingly, before implementation of the tender offer of securities, public companies have to submit the application file for registration of a tender offerof securities to the SSC. Within a time limit of thirty (30) days from the date of receipt of a valid application file, the SSC shall consider and issue a certificate of acceptance [of registration] of the tender offer of securities to the issuing organization.
Your company is a public company. Therefore, it must comply with the procedure stipulated in Article 13 of the Law on Securities of 2006. Accordingly, it appears that your company breached such regulation, therefore, it was dealt with breach by the SSC.
For the meeting of the GMS, Clause 3 Article 97 of the 2005 Law on Enterprises stipulates that the Board of Management must convene an extraordinary meeting of the GMS in the following cases:
a) The Board of Management considers it necessary to do so in the interests of the company;
b) The number of the remaining members of the Board of Management is less than the number of members required by law;
c) Upon request by a shareholder or a group of shareholders as stipulated in clause 2 of article 79 of this Law;
d) Upon demand by the Inspection Committee;
e) In other cases stipulated by law and the Charter of the company.
Currently, there are no specific regulation of laws providing that the SSC has the right to request the public company to convene an extraordinary meeting of GMS. In principle, except the Charter of your company has the regulations on the other cases the Board of Management must convene an extraordinary meeting of GMS, your company does not need convene an extraordinary meeting of the GMS.
However, your company is required to comply with regulations on corporate information disclosure as stipulated in the Law on Securities.
According to item a Clause 4 Article 101 of the Law on Securities, a public company must disclose information upon request of the SSC on the occurrence of the events: There is information relating to the public company that seriously affects the lawful interests of investors.
According to Clause 4 Article 100 of the Law on Securities, information shall be disclosed by way of the mass media, by publications of organizations and companies, and on the information network of the Stock Exchange or Securities Trading Centre, but not by way of an extraordinary meeting of GMS.
orther:
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