Enhancing transparency and trust: SEC’s cautionary measures

In a bid to enhance transparency and trust in the capital market, the Securities and Exchange Commission (SEC) is set to introduce cautionary measures for securities that fail to conform to the listing regulations. This initiative will start on April 1. The SEC is also considering a revamp of its listing rules to elevate the quality of listed companies by early next year.

The SEC’s board has agreed with the proposal presented by the Stock Exchange of Thailand (SET) to refine the bourse’s listing criteria. This is aimed at improving the vetting process for companies that intend to list on the Thai bourse and to supervise the existing listed firms more effectively.

The SET has suggested enhancing the financial status and operational performance qualifications of companies waiting to be listed on the main bourse and the Market for Alternative Investment (MAI). This includes the requirement for companies to demonstrate a profit of 75 million baht in the previous year, a significant increase from the current 30 million baht, and three-year cumulative profits of 125 million baht, up from the current 50 million baht, for listing on the SET.

For the MAI, the profit requirement for the preceding year has been raised to 25 million baht from the existing 10 million baht. A new two-year cumulative profit of 40 million baht has been introduced, which was not part of the earlier rule.

The listing rules also stipulate an increase in shareholders’ equity post an initial public offering (IPO) to 800 million baht for SET listing, a substantial rise from the current 300 million baht. For the MAI, the equity requirement has been doubled to 100 million baht from 50 million baht.

There is a decrease in the paid-up capital requirement post-IPO to 100 million baht from the existing 300 million baht for SET-listed companies, and 50 million baht for the MAI. The free float requirement for the SET and MAI-listed shares is set at 30%, with up to 1,000 and 300 minority shareholders respectively.

Stock trading

The SEC plans to enhance backdoor listing rules, and criteria for resuming stock trading, and increase the level of investor notifications and the delisting of companies. It also aims to strengthen the criteria for disclosing the names of shareholders and unitholders for listed companies, trusts, and funds. These changes are set to take effect from April 1.

In addition to these measures, the SEC is contemplating the most suitable ratio of program trading for the SET, to ensure fair trading for all parties involved. Currently, program trading constitutes 30-40% of average daily trading, and the new requirement is set to be implemented in early March.

The SEC, in collaboration with the SET, is studying guidelines for issuing auto-halt criteria or temporarily suspending securities trading for stocks with irregular trading. These regulations are expected to be put into practice by 2024, revealed the Secretary-General, reported Bangkok Post.