In response to the erosion of confidence in the Thai capital market, the Stock Exchange of Thailand (SET) and the Securities and Exchange Commission (SEC) have agreed to upgrade listing regulations and strengthen supervision to enhance the quality of listed companies.
The SET board of governors approved guidelines for improving the criteria for listed companies on the main bourse and the Market for Alternative Investment (MAI) to facilitate companies with strong financial positions and performance tapping into the capital market.
Moreover, the SET plans to strengthen its oversight of listed companies by revising the regulations for assigning the C (caution) sign, delisting and backdoor listing to improve the quality of listed companies and protect investors.
The new rules will be subject to public hearings in the third quarter, said the bourse.
"This is in line with our three-year strategic plan [2023-25] to widen funding opportunities for businesses of all sizes and to address problems as we strive to compete with foreign stock exchanges," said SET president Pakorn Peetathawatchai.
The amendments will take into account the size and financial position of listed companies or those wishing to list. Beefing up the supervision of listed companies to enhance their quality and to protect investors is among the adjustments, he said.
To reposition the SET and the MAI, the qualifications of companies listed on both markets will be revised to require higher profitability and shareholders' equity, reflecting stronger financial health and performance, said Mr Pakorn.
"The minimum paid-up capital requirement to list on both bourses remains the same to align with their goals and to maximise the use of the capital market by issuers at full efficiency. In addition, requirements for free float and the public offering allocation ratio of small companies will be increased to improve the liquidity of the secondary market," he said.
Mr Pakorn said oversight of listed companies should be stepped up, with the bourse adding options for when it can post the C sign to warn investors about companies with a deteriorating financial position, low operating revenue or losses for an extended period, or that have defaulted on financial institutions' loans or debt instruments, or face a disclaimer of opinion by auditors.
"Firms that are financially ailing usually make material changes, such as in shareholders or business goals, and become targets of backdoor listing. As such, irregular trading activities may occur," he said.
Delisting rules would also become more stringent. For example, the SET board will delist companies that are unable to resolve the grounds for delisting and return to trading by becoming a quality company by the required deadline, said Mr Pakorn.
In addition, the SEC will apply the same qualifications for companies seeking backdoor listings as initial public offerings to ensure all listed companies have similar quality, he said.
"The amendments are the result of collaboration between the SET and the SEC to raise the level of supervision of listed companies, which should increase the confidence and stability of the capital market," said Mr Pakorn.
The bourse will listen to opinions from relevant parties before submitting proposals to the SEC board for approval, he said. The use of new criteria will be announced at an appropriate time, said Mr Pakorn.
