Background and Policy Objectives
The Securities and Exchange Commission of Thailand (the “SEC”) has introduced a comprehensive revision of the regulatory framework governing Material Transactions and Connected Transactions applicable to listed companies and companies authorised to offer newly issued shares to the public and subject to disclosure obligations under Section 56 of the Securities and Exchange Act, B.E. 2535 (1934) (as amended).
The revised regulations aim to enhance investor protection, particularly for minority shareholders, by introducing a veto right mechanism and reinforcing the substance-over-form principle; increase legal clarity and certainty through a unified and more objective regulatory framework—reducing reliance on uncertain interpretation and consolidating requirements previously dispersed across SEC and the Stock Exchange of Thailand (the “SET”) regulations.
These changes follow multiple rounds of public hearing conducted over several years, most recently in 2025, and were finalised in December 2025 by the SEC and the Capital Market Supervisory Board. The new regulations are scheduled to take effect in July 2026.
Material Transaction Regulation – Key Highlights
- Expanded scope of material transactions
The revised framework broadens the definition of a material transaction beyond asset acquisitions or disposals to cover lease, hire-purchase, and similar arrangements outside the ordinary course of business, as well as providing financial assistance.
- Clear and express exemptions
To reduce regulatory uncertainty, the revised regulations expressly exclude certain transactions from the MT regime, including intra-group transactions, the establishment of new subsidiaries, and transactions undertaken for liquidity management or involving current assets in the ordinary course of business.
- Listed parent–listed subsidiary carve-out
A Thai listed company that is a parent of another Thai listed company is excluded from MT (and connected transaction) requirements, provided that the subsidiary has already complied with the applicable regulatory framework, thereby avoiding duplicative regulation.
- Extended aggregation period
Transactions that are related in substance must now be aggregated over a 12-month period (increased from 6 months), significantly limiting the ability to structure or stagger transactions to avoid regulatory thresholds.
- Minority shareholder veto right
A key enhancement is the introduction of a minority shareholder veto mechanism. Where the audit committee or the independent financial adviser (IFA) opines that a transaction should not be approved, shareholders holding at least 10% of voting rights may oppose and effectively block the transaction, even if formal approval requirements are otherwise satisfied.
- Enhanced post-approval transparency
Listed companies are subject to strengthened ongoing disclosure obligations, including periodic progress reporting through the Stock Exchange of Thailand system and corresponding disclosure in the Form 56-1 One Report, which includes the name and type of the transaction, the approval date, a summary of key transaction details, and the current progress status (In the event that a transaction is cancelled or cannot be completed, listed company must disclose the reasons for such cancellation or non-completion and the resulting impacts). This ensures continued transparency until completion or termination of the transaction.
Connected Transaction Regulation – Key Highlights
- Broader and more principle-based regulatory scope
The revised framework reinforces a substance-over-form approach to connected transactions, empowering the regulator to capture transactions that, in substance, involve conflicts of interest or related parties, even if structured to fall outside technical definitions.
- Expanded focus on financial assistance and “special case” transactions
Enhanced regulatory scrutiny applies where a listed company provides financial assistance to:
- a connected person who is a natural person;
- a connected juristic person in which the listed company or its subsidiary holds shares in a lower proportion than other connected persons; or
- a connected juristic person in which the listed company or its subsidiary does not hold shares.
In such special cases, the transaction must be submitted to the board of directors for approval in all circumstances, reflecting heightened concern over potential conflicts and financial risk.
- Expanded aggregation scope for transaction size calculation
While the 6-month aggregation period remains unchanged, the revised rules broaden the scope of persons whose transactions must be aggregated, extending beyond connected persons, related persons, and close relatives to also include controlling persons and major shareholders of the connected party including its related persons, and close relatives and juristic persons whose major shareholders or controlling persons are any of the foregoing, significantly limiting structuring techniques to avoid regulatory thresholds.
- Minority shareholder protection through veto mechanism
Similar to MT, the revised framework introduces a minority shareholder veto right. Where the audit committee or the Independent Financial Adviser (IFA) advises against approval, shareholders holding at least 10% of voting rights may collectively oppose and block the transaction, reinforcing substantive shareholder protection.
- Enhanced transparency throughout the transaction lifecycle
Beyond initial approval, listed companies must maintain ongoing transparency through periodic reporting and disclosure until completion or termination. Such reporting must include the name and type of the transaction, the approval date, a summary of key transaction details, and the current progress status (In the event that a transaction is cancelled or cannot be completed, listed company must disclose the reasons for such cancellation or non-completion and the resulting impacts). This ensures that connected transactions remain visible to investors beyond the approval stage.
The revised regulations on Material Transactions and Connected Transactions are designed to enhance the credibility of the Thai capital market, strengthen transparency, and elevate minority shareholder protection. They reflect the SEC’s clear policy direction toward substance-based regulation and higher corporate governance standards.
That said, the true test of these reforms will lie in practical implementation. Market participants will need to closely monitor how the rules are interpreted and applied in practice—particularly in relation to regulatory discretion, board judgment, and the operation of the minority shareholder veto mechanism—as these factors may give rise to new interpretive and execution challenges once the regulations take effect.
Authored byThitawan Thanasombatpaisarn, partner of Kudun and Partners, together withViparat TimprathuangandSirivipa Kittisubun,associates of the firm.