Thailand’s Office of the Securities and Exchange Commission (the “SEC Office”) has revamped various rules relating to private placements by listed companies with a view to streamlining the offering process and reducing the documentation required for submission to the SEC Office. Most of these rules were revised by the Capital Market Supervisory Board on December 28, 2022, and will come into effect on July 1, 2023.

The key amendments in the new rules are summarized below.

Elimination of Application Requirement

Issuers are no longer required to apply to the SEC Office prior to offering their shares via private placement, according to new rules laid out in the Notification of the Capital Market Supervisory Board No. TorChor 28/2565 Re: Permission for Listed Companies to Offer Newly Issued Ordinary Shares via Private Placement (the “TorChor 28/2565 Notification”). The rules detailed in this notification will replace the current private placement rules under the Notification of the Capital Market Supervisory Board No. TorChor 72/2558 Re: Permission for Listed Companies to Offer Newly Issued Ordinary Shares via Private Placement.

Under the TorChor 28/2565 Notification, issuers may offer their shares via private placements that are share offerings to no more than 50 high-net-worth or ultra-high-net-worth investors within 12 months, share offerings valued at no more than THB 20 million within 12 months, or share offerings to institutional investors (excluding share offerings to the issuer’s directors or employees), so long as the issuer complies with its information disclosure and corporate approval requirements, which remain mostly unchanged under the new notification.

To fulfill these requirements, notice of a shareholders’ meeting must be submitted to all shareholders at least 14 days in advance, and the offering must be approved by a supermajority vote of the shareholders, which means approval by at least three-fourths of the shareholders present and entitled to vote at the shareholders’ meeting. If the offering price is lower than the market price, there must be no veto of the offering by shareholders holding 10 percent or more of the total issued shares in aggregate (but see additional requirements described in the next section).

Thanks to this no-filing approach, the issuer can now place remaining shares from a rights offering (RO) or a preferential public offering (PPO) via private placement with more flexibility, provided that the issuer complies with the 14-day notice requirement, obtains a supermajority vote from the shareholders’ meeting, and receives a clear mandate from the shareholders’ meeting to place the shares at a price that is not lower than the offering price of the RO or PPO.

Submission of Independent Financial Advisory Opinion

Despite adopting this deemed-approval approach and eliminating the filing requirements, the Capital Market Supervisory Board has introduced a new requirement under the TorChor 28/2565 Notification requiring issuers to submit the opinion of an independent financial advisor (IFA) together with the notice of the shareholders’ meeting. This requirement, which does not apply to private placements of any remaining shares from an RO or PPO, is triggered for “material” offerings in any of the following cases:

• The offering price is lower than the market price;
• The offering of shares may result in any investor being a shareholder with the highest voting rights in a listed company—including shareholding by any person under Section 258 of the Securities and Exchange Act B.E. 2535, as amended (e.g., the investor’s spouse and minor children, any juristic person in which the investor together with his or her spouse and minor children has more than 30 percent shareholding, or any person having more than 30 percent shareholding in the investor as a juristic person); any concert party of the investor; and any person under Section 258 of the concert party of the investor; or
• The offering of shares may affect the earnings per share dilution or control dilution of at least 25 percent of the number of paid-up shares before the date on which the board of directors resolved to propose the offering to the shareholders’ meeting.

The opinion of the IFA must contain at least the following information:

• Appropriateness of the offering price and conditions of the offering;
• Reasonableness and benefits of the offering to the investors, including the use of proceeds, in comparison with the impacts on the shareholders; and
• An opinion (with reasons) on whether the shareholders should vote to approve the offering.

The issuer must submit the draft notice of the shareholders’ meeting and the draft opinion of the IFA to the SEC Office via the office’s e-submission system. The SEC Office will provide feedback within five business days of all documentation being submitted.

Simplification of Market Price Calculation

The TorChor 28/2565 Notification now provides that the issuer must first use the weighted average price of the shares as a benchmark to determine the market price, except when the weighted average price cannot be calculated or is not suitable due to the liquidity of the issuer’s shares. In such a case, the issuer must use the book-building price first, or the fair price determined by a qualified financial advisor if there is a reason the book-building price cannot be used.

In this regard, “weighted average price” means the weighted average price of the issuer’s shares traded on the Stock Exchange of Thailand over at least seven (but no more than 15) consecutive business days before the offering date. The offering date is figured as either the date on which the board of directors determined the offering price (if the board of directors received a mandate from the shareholders’ meeting to determine the offering price based on the market price), or the date on which the board of directors proposed the offering at a specific price to the shareholders’ meeting for approval.

Moreover, the board of directors may set the offering price higher than the calculated weighted average price or at a discount of up to 10 percent by taking into account the market conditions if there are reasonable grounds for doing so and the board of directors has considered the company’s best interests.

Clarification of Offering Period

The TorChor 28/2565 Notification also clarifies the offering period for each placement type. If a shareholders’ meeting grants the board of directors a mandate to determine the offering price based on the market price, the TorChor 28/2565 Notification requires that each placement be completed within five business days after each determination of the offering price by the board of directors, and the offering period cannot exceed 12 months from the shareholders’ meeting.

If the shareholders’ meeting approves a private placement at a specific price, the placement must be completed within three months from the shareholders’ meeting. After these three months, the board of directors may be authorized by the shareholders’ meeting to further determine the offering price based on the market price, in which case the offering period can be extended to a maximum of 12 months from the shareholders’ meeting, but each placement must still be completed within five business days after each determination of the offering price by the board of directors.

As for the placement of remaining shares from an RO or PPO, this must be completed within three months after the end of the subscription period of the RO or PPO.

For more details on these latest rules for private placements by listed companies, or on any aspect of complying with securities laws and regulations in Thailand, please contact Tilleke & Gibbins at [email protected] or [email protected].