Legal Expert Urges NBTC To Disqualify True-Dtac Merger Advisor Finanza Securities Due To A Conflict Of Interest

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https://www.nationthailand.com/pr-news/thailand/general/40020274

Legal expert urges NBTC to disqualify True-Dtac merger advisor Finanza Securities due to a conflict of interest

Legal Expert Urges NBTC To Disqualify True-Dtac Merger Advisor Finanza Securities Due To A Conflict Of Interest

WEDNESDAY, SEPTEMBER 21, 2022

THE NATION

On September 20, Ekachai Chainuwat, A Legal Scholar, Travelled To Submit A Complaint To The Office Of The National Broadcasting And Telecommunications Commission (NBTC), In The Matter Of A Lack Of Qualifications And Irregularities In The Opinion Of The Independent Advisor (Finanza Securities Co., Ltd.), In The Case Of The Merger Between True And Dtac, Which Was Presented To The NBTC And The NBTC Secretary-General.

Ekachai, a legal expert, said that after closely following progress in the considerations of a merger deal between True and Dtac, he had never seen any explanation from the NBTC on the issue of the independent advisor (Finanza Securities Co., Ltd.), about which he had suspicions, and wished to protest about this issue.

Independent advisor is a stakeholder with the parties requesting the merger

In the last paragraph of Section 10 of the NBTC announcement of 2018, in the matter of measures to regulate and oversee businesses, it is written that, “The Secretary-General of NBTC appoints an independent advisor with qualifications pursuant to the appendix to this Announcement, for preparing an opinion on the issue of the business merger.” In the appendix, the independent advisor must, “Be independent and have no connection or stake holding with the licensee, or persons with authority to control the licensee, or other licensees merging their business with the licensee, or persons with authority to control that licensee.” In section 2.2, “… it does not have shares held by a licensee or persons with authority to control the licensee, or business units in the licensee’s group, or subsidiary companies of the licensee, or a judicial person who may be in conflict with the licensee, or persons with authority to control the licensee.” However, the facts appear as follows:
 

Legal expert urges NBTC to disqualify True-Dtac merger advisor Finanza Securities due to a conflict of interest

Concerning Finanza Securities Co., Ltd., who is the independent advisor, whose name was sent to NBTC by the parties requesting the merger, to be appointed to give an opinion to support the considerations, Finanza Securities was indeed connected and had a stake holding with persons with the authority to control directors of True, which was a party requesting the merger. That is, Finanza Securities is 100% held by FSS International Securities, an investment advisor. FSS Securities is 89.99% held by Finansia Syrus Securities, of which Mr Chaval Chearavanont holds 1.63%. Mr Chatchaval Chearavanont, who is the father of Mr Chaval Chearavanont, holds the position of Chairman of the Board of Directors, and Mr Chatchaval Chearavanont concurrently holds the position of Executive Director in True, otherwise one of the parties requesting the merger. 

Therefore, Finanza Securities lacks qualification in the matter of independence and may not fulfill its obligations as an independent advisor, which would provide an opinion for the considerations of NBTC, pursuant to the Announcement on business mergers of 2018. This is because Mr Chatchaval is the chairman of a company which has an indirect shareholding in Finanza Securities of 89.99%, and would inevitably present an opinion to the NBTC in the matter of the merger, which would be of benefit to the parties requesting the merger.

Regarding this, the House of Representatives’ Extraordinary Committee to consider and study the impact of the telecom business merger between True and Dtac sent a letter to the Prime Minister dated 28 April 2022, submitting study results and suggestions to the Prime Minister to put the merger on hold. The study had found that the qualifications of the advisor may not be truly independent, and may be in conflict with the NBTC’s stipulated selection criteria. The House Committee warned representatives of NBTC who were attending the meeting, but NBTC did not make any explanation to clear up the suspicions, or take any other action in this matter.

Legal expert urges NBTC to disqualify True-Dtac merger advisor Finanza Securities due to a conflict of interest

Independent advisor’s report was invalid and incomplete

Concerning the working procedure of the independent advisor with the Office of the NBTC, it was found that Finanza Securities, which had been appointed, normally was required to perform studies, discover information and give various opinions as ordered for action by NBTC, but it appeared that when Finanza Securities had submitted the report of its opinions to the Office of the NBTC to consider, the Office of the NBTC had the opinion that on some issues, the information was incomplete and requested additional study, otherwise it would be considered an invalid report. However, Finanza Securities refused to undertake this, despite the Office of the NBTC’s statement to True and Dtac. Eventually, through the assistance of the Office of the NBTC for the deal to proceed successfully, the Office of the NBTC became the party conducting its study and making additions to the report itself instead of the independent advisor. For this reason, NBTC was not able to use this report to support their considerations. The independent advisor was required to make additions, otherwise it would be an incorrect report, and incomplete according to the procedure stipulated in the Announcement.

Council of State’s opinion is not binding on NBTC

As for the NBTC’s consultation on its authority with the Council of State for the second time, the legal expert had the opinion that NBTC was an organization with the independence to regulate and oversee broadcasting and telecommunications businesses pursuant to the Thai Constitution of 2017 Section 60, while according to the Council of State’s own regulations, it was clearly stated that it only had the obligation to give legal opinions to government agencies under the authority and oversight of the executive branch. Therefore, the opinion of the Council of State was not binding on the NBTC, because this was in conflict with NBTC’s obligations as an independent organization, which was the reason that NBTC could not cite it in any consideration.

Ekachai concluded that he was requesting the NBTC board to consider revoking the appointment of Finanza Securities Co., Ltd. as an independent advisor to prepare opinions supporting considerations of the merger on this occasion, and appoint an independent advisor who was completely qualified pursuant to the Announcement on business mergers of 2018, and who would be genuinely independent, without any interference from or conflict of interest with the group of companies requesting the merger.
 

THE NATION

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