On 17 May 2022, the Capital Market Supervisory Board Meeting No. 4/2565 passed a resolution approving in principle the proposed amendments to the regulations on approval for issuance and offering for sale of newly issued securities to the public (IPO) whereby issuing companies and listed companies would not be allowed to operate business as an investment company to prevent the misuse of the IPO channel as a tool to evade or contravene the governing law and regulations (regulatory arbitrage) on the undertaking of investment management business,* which prescribe stricter supervision. For example, it is compulsory to obtain an investment management business license, establish the readiness of work systems and personnel and comply with the investment policy disclosed in the mutual fund schemes and relevant rules, etc.  

The SEC and the SET are therefore proposing the principles for amending the regulations on approval for issuance and offering for sale of newly issued securities to investors and the public  and the rules relevant to listed companies on the SET and the mai. This is to ensure clarity on the characteristics of business undertaking that may be deemed an undertaking of business as an investment company, and to prevent legal evasion as well as to protect the interest of shareholders and investors. Essentially, the proposed amendments would:   

(1)  Prohibit both Thai and foreign companies issuing shares for sale to the public and listed companies from operating business with the characteristics of investment company, except companies operating a financial institution business;**  

(2)  Define a company possessing the characteristics of investment company as a company that makes passive investment in securities, derivatives or digital assets, at a collective total amount exceeding 40 percent of the total assets, except in certain cases. For example, investment to maintain liquidity in low risk assets, investment in a joint company that is not an investment company, investment in a subsidiary under the same group of the parent company or investment in a company under the business network or inter-corporate synergy or investment in a company in the value chain, etc.;  

(3)  Require any listed company on the SET and the mai making passive investment at a total amount exceeding 40 percent of the total assets to disclose information related to such investment in the Notes to the Financial Statements;  

(4)  Specify that the SET shall issue additional rules on status maintenance of listed companies on the SET and the mai whereby their business operation shall not have the characteristics of investment company, and shall also issue and impose disciplinary measures on violating listed companies by posting investor alert signs and determining a grace period. In case of failure to proceed as instructed, the violating companies shall be delisted from the SET; and

(5)  Prohibit any listed company on the SET and the mai that has been imposed with disciplinary measures by the SET due to failure to comply with the status maintenance rules from issuing securities of all types for sale to investors and the public under the Securities and Exchange Act B.E. 2535 (1992) unless a waiver is granted by the SEC based on necessary and appropriate grounds.

The SEC and the SET have published the consultation paper at https://www.sec.or.th/TH/Pages/PB_Detail.aspx?SECID=818 and  www.set.or.th. Stakeholders and interested parties are welcome to give comments and suggestions via the websites or email: chananisa@sec.or.th or wareeya@set.or.th. The public hearing ends on 18 August 2022.  

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Remarks:  

* Consisting of the laws and regulations concerning the undertaking of mutual fund management business, private fund management business, derivatives fund manager and digital asset fund manager.    

** Companies operating financial institution business are commercial banks, finance companies, credit foncier companies, securities businesses, life insurance business and insurance business.