Bangkok, 10 June 2022 – The Securities and Exchange Commission (SEC) is seeking public comments on proposed amendments to the regulations related to approval for offering of newly issued shares to the public (IPO) in the part of issuer qualifications. The amendments would specify more clearly the requirement of not being involved in any illegal business. This is to ensure that the IPO regulations are in accordance with the intention of the law and issuing companies are able to comply with such regulations efficiently.
Currently, the IPO regulations specify that an IPO applicant shall not get involved in any illegal business without specifically defining the term. Thus, the term can be broadly interpreted and may be inconsistent with the intention of the regulations whereby a misdemeanor, an insignificant act or any wrongdoing not directly involved with the issuer’s core business shall be excluded. Given the current circumstance, the issuer needs to rectify any illegal business activities in accordance with the board definition prior to obtaining an IPO approval. This could delay fundraising and consequently compromise business opportunities.
The SEC is therefore proposing to amend the IPO regulations by clarifying the issuer’s qualification of non-involvement in an illegal business to ensure clarity and consistency with the Stock Exchange of Thailand’s rules for IPO on LiVe Exchange. On 19 October 2021, the Capital Market Supervisory Board Meeting No. 13/2564 passed a resolution approving the proposed amendments which essentially would:
(1) Revise the wording on the determination of the qualifications of an issuer of an initial public offering to be clearer in the part of non-involvement in an illegal business. The revision would exclude any insignificant misdemeanor or any wrongdoing not directly related to the issuer’s core business. In any event, the issuer must not operate business in such a way that involves severely illegal business. For example, human trafficking, drug smuggling or money laundering etc. Moreover, the issuer must not act in violation or non-compliance with the law, which may cause severe and significant effects on the issuer’s business;
(2) Empower the SEC to lay out guidelines in detail regarding the consideration of cases involving severe legal violation or causing severe and significant effects.
In addition, the proposed amendments to the IPO regulations above shall apply to both Thai and foreign companies seeking a primary listing* and a secondary listing.**
The consultation paper is available at https://www.sec.or.th/TH/Pages/PB_Detail.aspx?SECID=812.
Stakeholders and interested parties are welcome to give comments and suggestions via the website or email: corporat@sec.or.th. The public hearing ends on 9 July 2022.
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Remarks:
* Primary listing means an offering for sale of shares by a foreign company whose shares are not listed on the a foreign exchange.
** Secondary listing means an offering for sale of shares by a foreign company whose shares are or will be listed on a foreign exchange.