Equity Instuments

Employee Stock Option Program (ESOP)

​Employee Stock Option Program (ESOP) is a tool to create motivation for personnel of the company to work effectively to promote the growth of the company by providing opportunity for directors and employee to take part in the ownership of the business.  Positive gains of the company will also benefit the shareholders. However, the capital increase may cause a dilution effect on shareholders. Therefore, supervision of the program must also take into account the protection of investors.

Regulatory Suumary

The criteria for approving ESOP apply to the following business and securities:

Business:

• Public company limited incorporated under Thai laws and having duty under section 56 (there are minority shareholders)

• Listed companies

• Company which listed companies hold > 50 percent shares

• Other public company limited (approval conditions will be simple which only require the decision of the shareholders' meeting, without having to clearly state that the shares are allocated to directors, employee)
  
  

Securities:

• Shares

• Convertible Debentures (CD)

• Warrant
  
  

Approval Conditions

The SEC generally approves the offer for sale of ESOP, namely, application to the SEC for approval is not required for the offer to sell newly issued shares for ESOP. However, the company must comply with the following conditions:

• It must comply with the rules on the protection of investor (ESOP rules).

• It must be approved by the shareholders' meeting and the sale must be completed within one year after the date of approval.

• It must submit checklist to the SEC with the report of the sale results within 15 days.
  
  

ESOP Rules

Can be divided into two cases according to the effects on shareholders:

• In case of a possible high dilution effect:

• Means the number of shares being offered is > five percent of paid-up shares at the date of the decision of the shareholders' meeting and the offering price can be categorized as an offering at a discount.
  
  

  ​Consideration of whether or not the offering price is at a discount must examine the rules on offering of securities at a low price of PO Placement​

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​​ The number of shares being offered  is calculated by​ The number of issued shares for this time + The number of shares and underlying shares for ESOP during the past five years (only those offered at a low price) ​

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• In case of a possible low dilution effect:

• Means offers for sale in other cases which do not create possible high dilution effect

Summary of ESOP Rules 

Additional rules in case of concentrated allocation

​Concentrated allocation is allocation to any person more than five percent of the approved number of shares, which must comply with additional rules as follows:

1. Additional information to be included in the notice of calling the Shareholders' Meeting:

• Cash benefit to be received (the value of ESOP minus the market value)

• ​Opinion of the compensation committee on the reason, necessity and benefit that the company will gain.  The committee consists of:

• ​At least three company directors

• No person who is allocated more than five percent of the shares beingpart of the committee

• The number of meetings attended and absent (in case of directors)

• ​Remuneration from the most recent year (salary, bonus or other remuneration) (only where the offering price is discounted from the market price)

2. Agenda of the meeting : request for approval of each director / staff

3. the shareholders' resolution: three-fourths of the total voting rights + not more than five percent of veto by shareholders attending the meeting and who are entitled to vote.​

Exceptions to ESOP rules

In case of the offer for sale of remaining securities after Rights Offering (RO) to directors or employee compliance with ESOP rules will be exempted only when:

1. It is decided at the same shareholders' meeting that approves RO that the remaining securities will be allocated to directors / employee.

2. If securities are allocated to directors, it must state the eligibility criteria for ESOP / maximum number for each person.

3. Allocation to directors / staff must be at a price and conditions not better than RO.

4. If the offering price is low, it must also comply with the rules on offering of Private Placement (PP) of shares at a discount. 
   
   

   ​​ Rights Offering Means it must be allocated to shareholders in proportionate number Is exempted from submitting application for approval and filing prior to the offer for sale under section 33

Related Rules and Regulations

• The Notification of the Capital Market Supervisory Board No. TorJor 32/2551 Re: Offer for Sale of Newly Issued Securities to Directors or Employees (Codified)​
  
  

Related Forms

• Checklist for ESOP by a non-listed subsidiary for the offer for sale of newly issued securities to directors or employee, where the offer is made by a subsidiary which is non-listed and report on the results of sale of securities

• Checklist for ESOP for the offer for sale of newly issued securities to directors or employee, where the offer is made by a listed company or a public company limited with the duty under section 56