Chapter 2
Structure of Financial Institution

Division 1
Shares and Shareholders

Section 15 The ordinary shares and preference shares of a financial institution shall be of the kind with name certificates having a par value of not more than one hundred Baht per share and are subject to no regulation of the financial institution restricting transfer of shares, except that such restriction is for the purpose of compliance with this Act.

Financial institutions may issue preference shares with no voting right or other preference shares only when being permitted by the Bank of Thailand, provided that the Bank of Thailand may prescribe any rule to be complied with.

Section 16 The amount of shares of a financial institution held by persons of Thai nationality shall not be less than seventy-five percent of the total amount of voting shares sold and the number of its directors who are persons of Thai nationality shall not be less than three quarters of the total number of directors.

In the case where the Bank of Thailand deems appropriate, the Bank of Thailand may grant permission that persons of non-Thai nationality hold shares up to forty-nine percent of the total amount of voting shares sold and may permit a proportion of non-
Thai nationality directors of more than one-quarters but shall not reach one half of the total number of directors.

In the case where it is necessary to rectify the operation or to strengthen the stability of any financial institution or for the purpose of the financial institutions system stability, the Minister with the recommendation of the Bank of Thailand shall have the
power to relax the requirement of the shareholding and directorship other than those prescribed in the second paragraph. Such relaxation may be granted with rule and time clause.

Section 17 Any person holding or possessing shares of any financial institution, either directly or indirectly, in an amount of no less than five percent of the total number of shares sold shall report the holding or possession of such shares to the Bank of Thailand in accordance with the rule as prescribed in the notification of the Bank of Thailand.

The amount of shares in the first paragraph shall include those held or possessed by related person of the person under the first paragraph.

The shares under the first paragraph shall not include preference shares with no voting rights. In the case where the person under the first paragraph does not report in accordance with the rule as prescribed in the notification of the Bank of Thailand, the provision under Section 19 shall apply to such unreported share mutatis mutandis.

Section 18 No person shall hold or possess shares of any financial institution, either directly or indirectly, in an amount exceeding ten percent of the total number of shares sold unless permitted by the Bank of Thailand or being in accordance with the rule as prescribed in the notification of the Bank of Thailand.

The amount of shares in the first paragraph shall include those held or possessed by related person of the person under the first paragraph. The shares under the first paragraph shall not include preference shares with no voting rights.

Section 19 Any person acquiring shares of any financial institution which causes the number of shares held or possessed to violate the provision of Section 18 shall dispose the exceeding amount of shares to any other persons within ninety days from the date of the receipt of such shares unless being waived by the Bank of Thailand. Such waiver shall not exceed ninety days.

In the case where the person under the first paragraph fails to dispose the exceeding amount of shares within the period as prescribed in the first paragraph, the Bank of Thailand may file a motion to the court to order the disposal of the said excess shares. Where the court deems that the holding or possessing of such shares violates
the provision of Section 18, the court shall have the power to order the sale by auction or otherwise.

Section 20 No financial institution shall dispose its shares to any person which causes the number of shares held or possessed by such person to violate the provision of Section 18.

The number of shares under the first paragraph shall include those held or possessed by related person of the person under the first paragraph. Whenever an invitation to subscribe for a share of any financial institution is made, such financial institution shall specify the rule as prescribed under Section 17, Section 18 and Section 19 in the prospectus.

Section 21 Any person holding or possessing shares of a financial institution in violation of Section 18 may not use such holding of shares in excess against the financial institution, and such financial institution may not pay dividend or any other form of benefits to such person, or allow such person to vote at a shareholder meeting on account of the portion of shares in excess.

In the case where the person under the first paragraph acquires shares in good faith from inheritance and the financial institution announces a dividend payment within the ninety day period from the date of the acquisition of such shares or within the
period extended by the Bank of Thailand under the first paragraph of Section 19, such person shall have the right to receive the dividend on account of the portion of shares in excess of ten percent as prescribed in Section 18. However, such person shall not be able to vote in the shareholder meeting for the portion of shares in excess.

Section 22 For the purpose of compliance with Section 16, Section 17, Section 18 and Section19, a financial institution shall examine its register of shareholders prior to each shareholder meeting, or prior to each distribution of dividends or any other form of benefits to shareholders and inform the Bank of Thailand of the results of such examination in accordance with the rule as prescribed in the notification of the Bank of Thailand.

In the case where any shareholder violates the provision of Section 18, the financial institution shall notify such person in writing to dispose the shares in excess within the period as prescribed under Section 19, and inform the Bank of Thailand of such matter.

Section 23 The provisions of Section 15 to Section 22 shall not apply to a foreign commercial bank’s branch established in the Kingdom and a foreign commercial bank’s subsidiary.

Division 2
Directors, Managers or Persons with Power of Management

Section 24 No financial institution shall appoint or allow any person with any of the following characteristics to be or to perform the duty of a director, a manager, a person with power of management or an advisor of the financial institution:

(1) being a bankrupt or having been discharged from bankruptcy for less than
five years.
(2) having been imprisoned by a final court judgment for an offense related to property committed with dishonest intent regardless of whether the sentence has been suspended or not.
(3) having been dismissed or discharged from a government agency, a government organization or a state agency on a charge of dishonest act in office.
(4) having been a person with power of management in a financial institution during its license withdrawal unless an exception has been granted by the Bank of Thailand.
(5) having been removed from position as a director, a manager or a person with power of management of a financial institution under Section 89 (3) or Section 90 (4) or under the laws on securities and exchange unless an exception has been granted by the Bank of Thailand.
(6) concurrently being a director, a manager, an officer, or a person with power of management of other financial institutions unless an exception has been granted by the Bank of Thailand.
(7) being a manager or a person with power of management besides the position of a director of a company being granted credits by or being guaranteed by or being given an aval by, or having contingent liabilities at the financial institution unless:
(a) being a director or an advisor of the financial institution which is not an executive director;
(b) being exempted in accordance with the rule as prescribed in notification of the Bank of Thailand.

(8) being a political official, a member of parliament, a senator, a member of district assembly, a district administrator or a person holding any other political position as prescribed in the notification of the Bank of Thailand.
(9) being an officer of the Bank of Thailand or a former officer of the Bank of Thailand in accordance with the rule as prescribed in the notification of the Bank of Thailand, except in the case where such person is appointed by the Bank of Thailand for the purpose of rectifying the financial condition or operation of the financial institution, or holding a position in a state enterprise financial institution in accordance with the laws on budget procedures. Provided that the officer or former officer shall not be entitled to receive any rights to purchase shares in such financial institution.
(10) being a person having any prohibited characteristics or having other disqualifications as prescribed in the notification of the Bank of Thailand.

Section 25 The appointment of a director, a manager, a person with power of management or an advisor of a financial institution shall be prior approved by the Bank of Thailand regardless of a new person appointment or reappointment for the person to retain the position.

In considering the approval under the first paragraph, the Bank of Thailand shall complete its consideration within fifteen business days from the date that the Bank of Thailand receives the application and all relevant documents as prescribed by the Bank of Thailand. If the result of consideration is not notified within the said period, it shall be deemed that the Bank of Thailand has granted an approval for such appointment.

In the case where it subsequently appears that the approved person under the first paragraph possesses any prohibited characteristics under Section 24, the Bank of Thailand shall withdraw such approval.

Section 26 In a shareholder annual meeting, a financial institution shall have the duty to notify or disclose to the shareholders of any form of benefits and any remuneration of a director, a manager and any person with power of management received from the financial institution and shall notify the shareholder meeting of the directorship of such person in other businesses in accordance with the rule as prescribed in the notification of the Bank of Thailand.

For the purpose of compliance with the first paragraph, a director shall have the duty to notify the financial institution of his directorship in other businesses.

Section 27 In undertaking the business of a financial institution, directors shall perform their duties in a similar manner to a careful business man and shall be jointly responsible in the management of the financial institution, including:

(1) conducting the financial institution to comply with this Act;
(2) preparing and keeping of accounts and other relevant documents to show the actual financial condition and the result of business operation of the financial institution, which shall be disclosed to the shareholders, depositors and the public for
recognition and inspection in accordance with the rule as prescribed in the notification of the Bank of Thailand;
(3) directing the financial institution to summon a shareholder meeting within four months from the end of the six-month accounting period in the case where it appears that such financial institution has incurred losses causing the shareholders’ equity at the end of the six-month accounting period under Section 67 to be lower than fifty percent of paid-up capital, and directing the financial institution to summon another shareholder meeting, in the case where the shareholders’ equity falls below twenty-five percent of the paid-up capital, in order to inform the shareholders of the actual financial condition and the result of business operation of the financial institution.

Section 28 Directors shall be jointly liable to the shareholders or depositors or holders of promissory notes issued by the financial institution for the purpose of procuring funds from the public for any damage caused by failure to perform their duties as ordered by the Bank of Thailand or the financial institution examiner in accordance with this Act, unless it could be proven that they did not commit dishonesty or involve in such failure to perform their duties.

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