SEC, as the agency responsible for the supervision and development of the Thai capital market, focuses on the development of more options for SMEs and startups to mobilize funds through the capital market by issuing shares or debt securities that suit the business sector. SEC now allows fund mobilization through crowdfunding, which makes use of digital technology to make the fund mobilization process for SMEs and startups easier and quicker.

In addition, since June 2019 SEC has been trying to find more ways to help SMEs and startups access funds in the capital market. SEC has collaborated with relevant agencies to systematically assess problems and difficulties faced by SMEs and startups. In September 2019, a working group for the promotion of small- and medium-sized enterprises, startups, and private equity firms, or the “SME Startup PE VC” working group, was set up. The group, comprising representatives from various government and private agencies, including the Stok Exchange of Thailand*, aims to set out measures to support fund mobilization by SMEs and startups in the central and provincial capital markets, taking into consideration balanced rules for both issuers and interested investors. SEC’s actions in this regard over the past months are as follows.

1.     Fund mobilization on the primary market: In August 2019, SEC considered allowing limited companies to mobilize funds on the primary market through initial offerings of shares and convertible bonds directly to a group of no more than ten investors and employees, with an aggregate value of no more than 20 million baht. This move is to enable SMEs and startups to mobilize funds more easily and to encourage high-potential employees to work with SMEs and startups. The public are invited to share their opinions on these rules until 25 December 2019. It is expected that the rules will be adopted early in 2020.

2.     Trading through secondary markets: SEC has discussed with the Stock Exchange of Thailand on the criteria for the trading of shares by SMEs and startups on secondary markets. It expects to allow investors on secondary markets, who have knowledge and understanding of SMEs and startups, to invest and trade shares of SMEs and startups. SEC will hold a meeting with the “SME Startup PE VC” panel to discuss details of the criteria on 19 December 2019.

3.     Improved rules: To keep fund mobilization costs for SMEs and startups low, SEC plans to make use of technology by requiring SMEs and startups to file financial reports through a mobile application. In addition, half-yearly and annual financial statements may be required instead of quarterly financial statements, and the qualifications for CFOs may not be determined. Auditors outside a list of certified auditors by SEC may also be considered acceptable, if they work at an auditing firm approved by SEC.

SEC Secretary-General Ruenvadee Suwanmongkol stated that “In June 2019, SEC for the first time considered allowing SMEs and startups to make securities offerings on primary and secondary markets. This is to allow high-potential businesses to access funds in the capital market. In September, a working group called “SME Startup PE VC,” comprising representatives from the Stock Exchange of Thailand and other government and private agencies, was established to consider the relevant ecological system, in order to identify problems and difficulties and to set out measures to address such problems. It is expected that the establishment of secondary markets for the trading of securities issued by SMEs and startups as well as the qualifications of eligible investors will be finalized on 19 December 2019.

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Remarks:

1.     Crowdfunding is a method of raising funds conducted by a crowdfunding service provider through a large group of people on a funding portal on the Internet. Each investor can invest only in a small amount of money, but a large enough crowd is needed to make the fundraising project successful.

2.     The “SME Startup PE VC” working group comprises representatives from various government and private agencies, i.e. the Fiscal Policy Office; the Office of Small and Medium Enterprise Promotion; the Department of Business Development, Ministry of Commerce; the Department of Industrial Promotion, Ministry of Industry; the Stock Exchange of Thailand; Small and Medium Enterprise Development Bank; the Bank for Agriculture and Agricultural Cooperatives; the Joint Standing Committee on Commerce, Industry and Banking; the Federation of Thai SME; the Thai Venture Capital Association; the Investment Banking Club; the Federation of Accounting Professions under the Royal Patronage of His Majesty the King; and the Federation of Thai Capital Market Organizations.