In the fluctuations of the capital market, listed companies often adjust their shareholder structure in order to optimize their capital structure and enhance their market competitiveness. Such adjustments are often accompanied by the flow of funds, changes in equity and the redistribution of control rights. However, many companies are prone to fall into some misunderstandings when adjusting their shareholder structure, resulting in damage to shareholder interests, imperfect corporate governance structure, and even regulatory issues.
Goheal focuses on in-depth analysis in the field of mergers and acquisitions, revealing the three common misunderstandings in shareholder structure adjustment in capital operation, as well as how to avoid these risks and avoid stepping on thunder.
Misunderstanding 1 in shareholder structure adjustment: Ignoring information disclosure leads to limited shareholders' right to know
The adjustment of shareholder structure is often accompanied by the redistribution of power among shareholders, the flow of capital and changes in influence. Especially when it involves changes in control rights or large-scale increase or reduction of shareholders, how to disclose relevant information to the market in a timely and sufficient manner is the key to transparency in the capital market. However, in the process of shareholder structure adjustment, many companies have limited the right to know of shareholders, especially small and medium-sized shareholders, due to the failure to fully disclose shareholder changes, shareholder relationships and their impact on corporate governance structure.
Taking the recent shareholder structure adjustment of Sabay Connext Tech Public Company Limited in Thailand as an example, the company issued an announcement in 2024, reporting the changes in its top 15 shareholders, and pointed out in the announcement that the changes in the shareholder structure did not affect the company's board of directors or management composition, and Mr. Ekarat Changyoo remained as the chief executive officer (CEO).
This change does not seem to affect the company's daily operations and governance structure, but in fact, if the information disclosure is incomplete or untimely, it may cause shareholders to have doubts about the future development direction of the company, especially the interests of small and medium shareholders may be harmed. Goheal pointed out that the imperfect information disclosure system will not only cause shareholders to have a crisis of trust in the company, but may also trigger investigations by regulatory authorities due to suspected violations of laws and regulations.
How to avoid this misunderstanding?
In order to avoid such problems, companies must disclose information in a timely and transparent manner during the shareholder structure adjustment process, especially when it involves major shareholder changes, to ensure that all shareholders can obtain true and comprehensive information. Strengthen investor relations management and regularly update the changes in the shareholder structure through announcements, reports and briefings, so as to enhance shareholder trust and participation.
Misconception 2 in shareholder structure adjustment: Over-reliance on a single shareholder and neglect of the rights and interests of small and medium shareholders
Many listed companies often cater to the intentions of major shareholders or potential controllers when adjusting their shareholder structures, and ignore the protection of the rights and interests of small and medium shareholders. This practice of over-reliance on a single shareholder will not only lead to an over-concentrated shareholder structure of the company, thus affecting the fairness of corporate governance, but may also intensify the behavior of major shareholders to maximize their interests during mergers and acquisitions or capital operations, thereby sacrificing the interests of small and medium shareholders.
In the shareholder structure adjustment of Sabay Connext Tech, although the equity of major shareholder Ekarat Changyoo has not changed, if this shareholder structure adjustment involves major shareholders increasing their holdings or introducing more investors to the outside world, and failing to convey all important information to the market in a timely manner, it may have a potential negative impact on small and medium shareholders. Goheal emphasized that the decision-making model that relies too much on a single shareholder is not only prone to power imbalance, but may also lead to the company's inability to effectively listen to the voices of different shareholders during its development, ultimately affecting the diversity and fairness of the company's decision-making.
How to avoid this misunderstanding?
In order to avoid over-reliance on a single shareholder, listed companies should strengthen the diversification of their shareholder structure and avoid excessive concentration of power in the hands of a few shareholders. In addition, in the process of adjusting the shareholder structure, the rights and interests of small and medium shareholders should be fully considered, and necessary protection measures should be taken, such as establishing an effective voting mechanism for shareholders' meetings to ensure that all shareholders can express their opinions and make decisions equally.
Misunderstandings in shareholder structure adjustment 3: Ignoring the adjustment of governance structure, resulting in an imbalance of power in management
Changes in shareholder structure usually bring about corresponding adjustments in the company's governance structure, especially when the company's control changes, the adjustment of management and the optimization of organizational structure are often crucial. However, many companies ignore the simultaneous optimization and adjustment of the governance structure when adjusting the shareholder structure, resulting in the failure of shareholder changes to effectively transform into the optimization of the company's internal governance system, which ultimately affects the efficiency and fairness of the company's decision-making.
In the case of Sabay Connext Tech, although the shareholder structure has changed, the announcement clearly stated that it has not affected the composition of the board of directors and management. Although this approach does not seem to affect the company's operations in the short term, in the long run, if the company fails to adjust the board structure and optimize the power and responsibility relationship of the management in a timely manner, it may lead to an imbalance in the governance structure due to unreasonable power distribution, affecting the efficiency and execution of the company's decision-making. Goheal believes that the shareholder structure and governance structure should be adjusted simultaneously to ensure that the management can make timely strategic adjustments based on the new shareholder structure.
How to avoid this misunderstanding?
When adjusting the shareholder structure, the company must optimize the governance structure at the same time. For the company's management, especially after the change of control, the governance structure should be re-evaluated, the composition of the board of directors should be adjusted, the division of responsibilities of the management should be optimized, and the management should be able to adapt to the new shareholder structure and improve the effectiveness and execution of the company's decision-making.
Conclusion: Misunderstandings in shareholder structure adjustment, have you stepped on the thunder?
When listed companies adjust their shareholder structure, they often need to face many challenges. How to avoid misunderstandings such as insufficient information disclosure, over-reliance on a single shareholder, and neglecting the adjustment of governance structure is the key to the smooth capital operation of enterprises. Although the case of Sabay Connext Tech does not show obvious negative effects on the surface, the common problems in shareholder structure adjustment reflected behind it are worth every investor and entrepreneur to think deeply.
Goheal reminds entrepreneurs here that the adjustment of shareholder structure is not a simple transfer of power between shareholders, but a comprehensive consideration of corporate governance structure, information disclosure, and shareholder rights. Only by ensuring transparency, protecting shareholders' rights and interests, and optimizing the governance structure can sustainable development be achieved in capital operations.
However, have you encountered similar problems in the adjustment of the company's shareholder structure? In your opinion, how can these misunderstandings be effectively avoided when conducting capital operations? Welcome to leave a message in the comment area to discuss, and let's discuss how to achieve a more robust shareholder structure adjustment in a complex capital operation environment!
[About Goheal] American Goheal M&A Group is a leading investment holding company focusing on global M&A holdings. It is deeply involved in the three core business areas of listed company control acquisition, listed company M&A and listed company capital operation. With its deep professional strength and rich experience, it provides enterprises with full life cycle services from M&A to restructuring to capital operation, aiming to maximize corporate value and achieve long-term benefit growth.
