Subscription, sale and allocation
Criteria for limiting the allocation of shares for Initial Public Offering (“IPO shares") which are allocated to sponsors and related parties (“RP") are prescribed to prevent concentrated allocation to sponsors and RP which will enable these groups to control the supply of shares in the stock exchange.
Such criteria may be summarized as follows:
1. Criteria for allocation of IPO shares
The definition of “sponsors" – persons who have done favours which clearly benefit the company, such as customer, supplier, etc.
The process of allocation of shares to sponsors
CEO or MD makes a list of sponsors
The Chief Executive Officer or the Managing Director (CEO or MD) must make a list of sponsors pursuant to the decision of the board of directors, with the characteristics of each sponsor. The company must arrange to have a monitoring process for the allocation to comply with the decision of the board of directors. For instance, an internal auditor may be assigned to monitor the allocation, etc.
2. Proportion of IPO shares being allocated
3. Disclosure of information
Sponsors: not more than 15 percent of the total number of IPO shares may be allocated to sponsors
RP and staff of the company and subsidiary: not more than 25 percent of the total number of IPO shares, when combined with the proportion of IPO shares allocated to sponsors
4. Criteria for the reporting of IPO shares allocation and the performance of duties of the underwriter
Disclosure of information on the allocation of IPO shares must be in filing, such as persons who will be allocated, the nature of relations and benefits, and the number of allocated shares
The underwriter must examine and co-sign the report of shares allocation to sponsors (form 81-1-IPO 200) to certify that “the company has a monitoring process for the allocation of IPO shares to sponsors which complies with related criteria."
The result of sale of IPO shares must be reported within 30 days after the closing date in the digital system of the SET
5. Other criteria
Criteria for authorizing IPO
The past five years record must not contain doubt that information in filing and application is inaccurate or incomplete, or that important information which might affect the qualifications of the company is concealed.
Offering price for PP is lower than IPO
after the date of application, the company is prohibited from offering to sell PP at a price lower than the IPO price.
during the six months period before submitting the application, if the company offers to sell PP shares at a lower price than IPO shares, such shares must be in silent period, except where the shares are derived from transactions during the 12-month period. For instance, debt restructuring with debt conversion into capital
Duties after sale of securities
The duties of the securities issuing company begin when filing comes into effect.