The Securities and Exchange Commission of Thailand (SEC) will refresh its definitions of institutional, high-net-worth (HNW), and ultra-high-net-worth (UHNW) investors according to its recently issued Notification No. Kor Jor 39/2564, effective on October 1, 2022. The key changes to these classifications are described below.
The SEC’s list of types of institutional investors will be expanded by the addition of the following four types:
- Venture capital. This refers to juristic persons established under Thai or foreign law for the purpose of investing in a startup, whereby the investors must not be retail investors.
- Private equity. This describes businesses established under Thai or foreign law for the purpose of investment by three or more nonretail investors who have appointed a person to manage the investment funds and accrued assets. The business must also have a policy to invest in other enterprises through arrangements that involve either stock investment agreements or other financial support giving rise to the right to acquire stock in the enterprise in the future. Under such arrangements, the private equity investor must demonstrate involvement in the enterprise’s business management (e.g., through planning, developmental, or other operational control).
- Sophisticated/professional investors. This type of investor includes (1) fund managers or derivatives fund managers in accordance with the Capital Market Supervisory Board’s rules on capital market business personnel; (2) investment analysts authorized by the SEC; and (3) angel investors, defined as experienced and knowledgeable SEC-approved financial advisors or crowdfunding portal providers, or other individual or juristic investors, with net assets of at least THB 50 million, annual revenue of at least THB 4 million, or gross direct investment in securities and derivatives of at least THB 10 million (or THB 20 million if cash deposits are aggregated). Investments by angel investors are limited to securities offered by SMEs or startups, or securities offered through an SEC-approved crowdfunding portal.
- Stakeholders of the issuer. Current and recent (i.e., in the past three months) directors, major shareholders, and subsidiaries or affiliates will be regarded as institutional investors only in relation to investment in securities issued by the company.
These changes reflect a more modernized approach to defining types of investors, such as by adopting internationally accepted terms like “angel investor.”
HNW and UHNW Investors
In general, the new notification lowers financial thresholds for the definitions of HNW and UHNW investors. This suggests that the SEC wants to expand the number of investors who can access high-risk securities and derivatives.
Under the new notification, HNW investors include individuals with net assets of at least THB 30 million, annual income of at least THB 3 million, or gross direct investment in securities and derivatives of at least THB 8 million (or THB 15 million if cash deposits are aggregated).
UHNW investors include individuals with net assets of at least THB 60 million, annual income of at least THB 6 million, or gross direct investment in securities and derivatives of at least THB 15 million (or THB 30 million if cash deposits are aggregated).
The new notification will come into effect on October 1, 2022. In the transition period before then, Thai and overseas securities companies, asset management companies, and other issuers and intermediaries, both in Thailand and in other countries, should update their offering documentation to ensure it is consistent with the new definitions.