8 May, 2016
Survey of ASEAN Regulations
Applicable Regulatory Body and Market Information
- Securities and Exchange Commission (“SEC”)
- The Stock Exchange of Thailand (“SET”) where the securities are to be listed onshore. • 639 listed companies as of 31/01/15.
- Market capitalization of THB 12,898.70 billion/ USD 359.49 billion as of 31/01/15.
Securities Offering and/or Registration and Exemption Requirements
Generally, offering for sale of any securities to the public in Thailand is prohibited unless an approval from the SEC is obtained (mandatory for newly issued securities only) and the registration statements and draft prospectus have been led with the SEC and become effective. Furthermore, after the sale is completed, a report of the result of sales shall be submitted to the SEC.
Foreign Shares32
Currently, the SEC accepts applications for approval to offer for sale to the public (Public Offering) of foreign shares only in the following scenarios:
a) For primary listing on the SET
b) For dual listing on both foreign exchange and the SET, and
c) Without listing on the SET (only permissible to shares of ASEAN corporations already listed or wishing to be listed on any stock exchange in ASEAN).
Exemptions
The above SEC approval and lling requirements are exempted in the case of offering for sale of foreign shares under the following circumstances/conditions:
a) Private placement of foreign shares which are de ned as either one of the following manners: (i) Made to no more than 50 investors within the period of 12 months;
(ii) An offer for sale of shares in an aggregate value of not exceeding THB 20 million within the period of 12 months, provided that the calculation of the aggregate value of such offered shares shall be based on the offering price of the shares;
(iii) An offer for sale of shares to Institutional Investors33; or
(iv) An offer for sale of shares where the seller and the purchaser are shareholders of the company who issues the shares and it is not an offer for sale in a general basis.
b) An offer for sale of foreign shares to directors or employees under Employee Stock Option Plan (ESOP) of such foreign company or its af liate in Thailand.
Foreign Debentures (Government Bonds or Corporate Bonds)
Offering for sale of foreign bonds is generally permissible. For foreign bonds issued in Thai Baht currency, pre- approval from the Ministry of Finance shall be obtained and it is currently granted to foreign bonds from ASEAN countries, China, Japan and South Korea only.
Offering of foreign bonds issued in foreign currency will be approved if it is from a member state that is a signatory on Appendix A of the IOSCO.
The SEC imposes different rules and conditions, such as terms & conditions, registration of transfer restrictions, debenture holders’ representative, ling, rating, etc., for different circumstances of offering, such as private placement or public offering.
Exemptions
Although approval from the SEC is deemed granted for all cases, submission of draft terms & conditions to the SEC is still required. Filing of registration statements and draft prospectus are exempted in the certain circumstances, including but not limited to the following:
(i) A private placement of newly issued government bonds or corporate bonds to no more than 10 investors within any 4 month period (with registration of transfer restriction);
(ii) An offer for sale of government bonds or corporate bonds issued by international nancial institutions under the obligation prescribed and approved by the Ministry of Finance as per the name list noti ed by the SEC Of ce;
(iii) The offer for sale of newly issued corporate bonds in Thailand to no more than 10 commercial banks under the law on financial institution business within any 4 month period.
Foreign Collective Investment Scheme (CIS)
Shares in a foreign investment company set up under CIS can be offered for sale in Thailand and exempted from SEC approval and ling requirements only under the following circumstances:
1. CIS from ASEAN countries34 (ASEAN CIS) – Offering of ASEAN CIS units to accredited investors, i.e. institutional investor or high net worth investor in Thailand, is subject to various conditions, including but not limited to, a) being managed by a qualifying CIS operator; b) the units are also being offered for sale in the home country; c) the units are offered and sold in Thailand via a Thai licensed brokerage rm; d) having a local representative in Thailand, etc.
Offering of CIS units to retail investors (general investors) in Thailand is subject to extra conditions (in addition to those applicable to Accredited Investors), including but not limited to, a) the home regulator has jointly signed with the SEC the Memorandum of Understanding on Streamlined Authorization Framework for Cross- border Public Offers of ASEAN CIS; b) details of the CIS scheme being consistent with the Handbook for CIS Operators of ASEAN CISs Part I and Part II; c) properly providing any channel to settle the dispute by any other measure other than court, unless the scheme speci es to comply with the Dispute Resolution and Enforcement Mechanism (“DREM”), etc.
2. CIS in the form of Foreign Exchange Traded Funds (ETFs) – Offering of foreign ETFs to investors in Thailand is subject to various conditions, including but not limited to, a) the home exchange being a member of WFE; b) the home regulator being a member of IOSCO; c) having objectives to create returns for unit holders with direct variation to certain variables, such as gold price, crude oil index, commodity index, etc.; d) the ETF operator appointing a contact person in Thailand for the purpose of coordinating and facilitating the prescribed matters in Thailand, etc.
Marketing of Securities Where Issuer/Sponsor Offshore and Investor Onshore
The same general requirements (as mentioned in the left column) apply to offering for sale of foreign securities cross-border to investors in Thailand, i.e. SEC approval, ling, and report of result of sale.
The term “offering for sale to the public” is interpreted broadly by the SEC. It is deemed to include any solicitation, marketing activities or attempt to approach any number of Thai investors by a foreign issuer and presenting that it is ready to trade or accept orders to trade foreign securities.
It is a practical exemption tolerated by the SEC (not express legal exemption) that a foreign offeror can respond to an unsolicited request made by a prospective investor from Thailand (“reverse inquiries”) which should not be deemed offering or marketing by that foreign offeror.
Need to Engage Onshore Sponsor, Licensed Placement or Other Distribution Agent
Offering and sale of foreign securities via a Thai licensed securities company would not avoid the general marketing prohibition, except for ASEAN CIS (please see previous section “Securities Offering and/or Registration and Exemption
Requirements”.
Legends or Other Disclosure Requirements on Offering Materials
No mandatory legends. Nevertheless, in the case of private placement (when applicable), any statement similar to the following is recommended when distributing offering materials:
“This document is distributed on a con dential basis to the person to whom it is addressed. This document may not be reproduced in any form or transmitted to any person other than the person to whom it is addressed.”
Other Relevant Considerations
1. The scope of this survey is limited to offering for sale of foreign shares and debentures in Thailand. Offering of other types of foreign securities, such as units of mutual fund, warrants, certi cates, derivatives, nancial instruments, etc. are not covered and may be subject different market prohibition and exemptions.
2. Certain tax consequences derived from cross-border transactions as well as the repatriation of capital, both inbound and outbound, shall be observed.
3. Notwithstanding the exemptions permitted by the SEC as summarized in this survey, the foreign offeror should observe that certain types of Institutional Investors are governed by speci c laws which may impose limits on their capability to invest in foreign securities. In addition, rules and restrictions under exchange control regulations by the Bank of Thailand always apply when Thai investors send funds offshore to invest in foreign securities.
32 The duty to submit report of result of sale shall, nevertheless, still apply to these exempted offering for sale of foreign shares.
33 Institutional Investors is de ned to include 13 different types of investors, such as commercial banks; nance com- panies; securities companies; credit foncier companies; insurance companies; government units and state enterprises, etc.
To view the complete guide, please click here.
34 Currently, only CIS from Malaysia and Singapore can be offered for sale in Thailand.
For further information, please contact:
Athistha (Nop) Chitranukroh, Tilleke & Gibbins
athistha.c@tilleke.com
