NBTC petitioned to check credentials of ‘Independent’ advisor to TRUE-DTAC merger as questions arise of conflict of interest

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The National Broadcasting and Telecommunication Commission (NBTC) has received a letter of complaint indicating that the ‘Independent Advisor’ to the merger deal of True Corporation Plc (TRUE) and Total Access communication Plc (DTAC), has a conflict of interest as the parent company of the independent advisor and the merging entities have common shareholders.

Ekachai Chainuwat, a legal scholar, travelled to submit a complaint to the NBTC, saying that the independent advisor in the matter of a lack of qualifications and irregularities in the opinion of the independent advisor (Finansa Securities Co., Ltd.), in the case of the merger between TRUE and DTAC, which was presented to the NBTC and the NBTC Secretary-General.

The letter of protest was handed because Finansa Securities, is not an ‘independent’ because the shareholders and board of Finansa Securities is connected to the Chearavanont family, the family that also owns TRUE.

Finansa Securities was the name sent by the merging entities to be the ‘independent’ advisor although a deep dive into the shareholding structure shows that there was a flaw in Finansa being ‘independent’.

Finansa Securities is 100% held by FSS International Securities, an investment advisor. FSS International Securities is 89.99% held by Finansia Syrus Securities, of which Chaval Chearavanont holds 1.63%. Chatchaval Chearavanont, who is the father of Chaval Chearavanont, holds the position of Chairman of the Board of Directors, and Chatchaval Chearavanont concurrently holds the position of Executive Director in TRUE, otherwise one of the parties requesting the merger.

This is a breach of the rules of engagement set forth by the NBTC which forbids any connected parties to be involved in the opinion of the merging entities.

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.”

Therefore, Finansa 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 Chatchaval is the chairman of a company which has an indirect shareholding in Finansa 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.

In regards to the working procedure of the independent advisor with the Office of the NBTC, it was found that Finansa 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 Finansa 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, Finansa 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.

Therefore Ekachai said, that he wants to request the NBTC board to consider revoking the appointment of Finansa 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.

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