Listing rules for foreign firms to relax – Aim is to improve market competitiveness

By: Nuntawun Polkuamdee

The Securities and Exchange Commission (SEC) will relax rules and regulations for foreign companies listing on the Stock Exchange of Thailand. The amended rules are expected to take effect by February 2015.

The regulations the commission intends to amend include the rules concerning raising funds from primary markets and dual-listing.

“This is a crucial step for improving Thailand’s market competitiveness to be compatible with our peers. We need to loosen the rules and be a better facilitator for new listing firms, not just Thai companies but for anyone from anywhere. This is a step towards being a fund-raising hub in the region,” said Tipsuda Thavaramara, the SEC’s deputy secretary-general.

The new listing rules for foreign companies are essential to facilitating foreign listings on the Thai market.

She said the regulator had taken a crucial role in improving the Thai capital market in terms of rules and regulations as these are among the major obstacles for investors, especially for foreign investors and foreign listed firms.

“To accomplish our ambition to be the fund-raising hub in the region in the future, it’s a crucial issue that we should address,” said Ms Tipsuda. “The current foreign listing rules are quite strict with too many requirements.”

Thailand’s capital market only allows foreign companies to seek listing on the secondary market.

Furthermore, eligible firms must be members of the World Federation of Exchange, requiring market capitalisation of at least 10 billion baht. They also have to have been listed on those markets for at least three years.

But no foreign firm has been listed on the SET under the current rules.

The SEC said the new rules would allow a foreign company to seek listing on the primary market as well as the secondary markets and dual-listing. If they want to seek listing on the secondary market and dual-listing, they will have to be governed by different regulators.

For listed companies from developed countries, if they seek listing on the Thai market as their secondary market, the Thai regulator will let them be governed by their own regulators.

“These groups are already governed by strong hands and practical regulations as they are members of the International Organization of Securities Commission, so we are confident about their rules and regulations including accounting standards and corporate governance,” said Ms Tipsuda.

“Their rules and regulations as well as other measures including auditor quality, independent directors and the silent period are at least on par with Thai bourse standards, and we can rely on their home regulator and home rules,” said Ms Tipsuda.

However, these groups are required to have an authorised person to represent the company. The firm also has to appoint a financial adviser once it been listed for a year.

For foreign companies on markets in developing countries which seek listing on the secondary market, the SEC will supervise them similar to Thai listed firms.

Furthermore, under the newly drafted foreign primary listing rules, the SEC requires all types of companies to be under its supervision and to comply with Thailand’s rules and regulations.

In addition, in cases where a foreign auditor is used, the auditor has to be able to cooperate closely with Thai regulators. The regulations also require the company to have at least two contact persons who are long-term residents of Thailand as company directors, another person to be the independent director and an internal audit committee.

“In cases where the rules and regulations in their primary listing markets are very different from those of the Thai bourse, the SEC needs to find some other measures to ensure foreign firms listed here are governed under the same standard as Thai firms,” said Ms Tipsuda. The new rules will be announced soon, she said.

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